Ukraine's central bank set to liberalize forex market this week

Head of the NBU's capital export and import regulation department Serhiy Chechel announced on October 15 that the regulator had been preparing new measures to liberalize regulations on the Ukrainian forex market, which are to be approved by the NBU board in the coming week.

The NBU press service told UNIAN that the regulator's plans hadn't changed, and the NBU Board would consider the issue.

At the moment, the Ukrainian forex market sees a number of limitations, including the obligatory sale of 75% of exporters' receipts in foreign currency and a 90-day limitation on export-import settlements.

The NBU also caps the maximum amount of foreign currency bought by banks for own transactions, to 0.1% of their regulatory capital.

What is more, a legal entity is able to buy foreign currency worth more than $50,000 in the equivalent only after submitting a package of required documents to the NBU and securing its green light to the transaction. The norm is not applied to contracts on critical imports.

The NBU's regulations do not allow banks to buy currency for a client with own forex assets. They also cannot buy and transfer foreign currency outside Ukraine to repay investment and pay dividends.

In addition, the sale of foreign currency in cash to an individual is limited to the equivalent worth UAH 3,000 (about $141 at the forex rate as of October 19) per day, and the withdrawal of cash from a bank account cannot exceed the equivalent worth UAH 20,000 (about $939) per day for foreign currency and UAH 300,000 (about $14,085) per day for the hryvnia.

The NBU announced it would completely lift all administrative limitations on the forex market and switch to market-based principles of forex regulations as of the middle of 2016. Major reasons for the NBU to launch the liberalization of the forex market include sufficient gold and forex reserves, fiscal consolidation and the development of the country's financial sector.