Gontareva: Restrictions on foreign exchange market agreed with IMF
The administrative measures imposed by the National Bank of Ukraine on the foreign exchange market, including Monday’s introduction of restrictions on importers, were agreed with the International Monetary Fund, NBU Governor Valeria Gontareva told an UNIAN correspondent on Wednesday.
Asked whether the latest moves by the regulator on the currency market, including restrictions on payment of import contracts, met the requirements of the IMF under the new memorandum, Gontareva said that the NBU always checked all administrative measures with the International Monetary Fund before introducing them. Everything was agreed with the fund, she said.
As reported earlier, on February 24 the National Bank of Ukraine introduced a number of restrictions on the foreign exchange market, including the mandatory inspection of import contracts with an advance payment worth more than $50,000, the obligatory registration of letter of credits to complete import contracts with advance payments worth more than $500,000, and a prohibition on lending to buy currency.
"The National Bank of Ukraine will take additional measures to stabilize the foreign exchange market if the restrictions put in place on Monday by the regulator do not bring the expected result," Gontareva said.
The NBU on Wednesday introduced a temporary ban on its authorized banks to buy foreign currency on behalf of their clients, including under previously filed applications. The ban will be in force until February 27.
As UNIAN reported earlier, in 2014, the National Bank of Ukraine moved to flexible exchange rate formation on the foreign exchange market, which resulted in the hryvnia practically halving in value against the dollar.
In late 2014, the NBU shifted to a symbiosis of market and administrative rate regulation, setting an indicative rate for the market through daily auctions in the interbank foreign exchange market using small quantities of its reserves.
As reported earlier, on February 5 the National Bank of Ukraine gave up conducting daily auctions in the currency market due to the loss of their effectiveness and the revitalization of the black currency market.
After the cancellation of the daily auctions the hryvnia’s official rate fell against the dollar by more than 1.5 times over a few days.
The National Bank of Ukraine on Tuesday, February 24, set the hryvnia exchange rate at UAH 28.2912 to the dollar, or six kopiykas higher than the last historic low rate of UAH 28.3481 set by the NBU on Monday, February 23.
Thus, since the beginning of the year the hryvnia’s official rate has fallen against the dollar by more than 1.8 times, or by UAH 12.52.
The strengthening of the hryvnia’s official exchange rate by the National Bank on February 24 contradicted the movement of courses on the market.
In particular, as a result of the indicative auction held by the NBU on Tuesday, the hryvnia equilibrium exchange rate as of 1330 was set at UAH 29.8943 to the dollar.
Some quotes for the hryvnia against the dollar on the interbank market, taking into account commission payments, reached UAH 31.90/33.40 to the dollar.
On February 12, the Ukrainian government approved a memorandum of cooperation with the International Monetary Fund on a medium-term program of financial assistance for Ukraine, designed for four years, under the Enhanced Extended Fund Facility (EFF) and worth a total of $17.5 billion.
The new program will replace the current two-year Stand-by program.
A final decision on the new program has to be taken by the IMF Board of Directors within the next four weeks.
The foreign exchange market has not yet seen a rebound since the positive news about Ukraine’s new program with the IMF broke last Thursday.
According to experts, a reduction in the tensions in the east of Ukraine is necessary to stabilize the hryvnia exchange rate in addition to the renewal of funding from the IMF and other sources.