REUTERS
The National Bank of Ukraine (NBU) will cancel its administrative restrictions on the foreign exchange market after Ukraine's Finance Ministry reaches an agreement with the creditors regarding restructuring of the country’s public debt, NBU Governor Valeria Gontareva said at a meeting of the Verkhovna Rada Committee on Financial Policy and Banking on July 15.
"We have worked out a program with the International Monetary Fund (IMF) on cancellation of currency restrictions. The next major cancelation of the restrictions will take place upon completion of a debt restructuring deal by Ukraine's Finance Ministry,” she said.
According to Gontareva, an important condition for the cancelation of the administrative restrictions by the NBU is the adoption of laws by the Ukrainian parliament on Thursday, July 16, envisaged under the program with the IMF, which will ensure the disbursement of the second tranche from the IMF in the amount of $1.7 billion.
As reported earlier, in June the National Bank of Ukraine extended a number of restrictions for three months until September 3, 2015. In particular, the NBU extended until September 3 the requirement for the compulsory sale of 75% of foreign currency revenues by exporters. The NBU also reinstated the 90-day term of payment for export and import transactions. A restriction was extended with regard to the purchase of non-cash currency by banks under own transactions to 0.1% of their regulatory capital per day. The NBU extended the limit on foreign cash withdrawals from deposits to the equivalent of UAH 15,000 per day and sale of foreign cash to the equivalent of UAH 3,000 per day.
The restrictions are designed to stop a rapid deposit outflow from the Ukrainian banking system, as well as hryvnia devaluation which, since the transition by the NBU to a flexible rate fixing in the currency market in 2014 and two months in 2015, depreciated against the U.S. dollar at the official rate by 3.8 times, hitting a new historic low of UAH 30.01 per U.S. dollar. After introduction of the NBU restrictions and the arrival of the first tranche under the IMF new cooperation program with Ukraine, the hryvnia strengthened with the exchange rate fluctuating within a range of UAH 20.5-23.5 per U.S. dollar in the past three months.