Friday, May 6, 2016

NBU eases forex restrictions for foreign investment

The National Bank of Ukraine (NBU) continues gradual liberalization of the temporary anti-crisis restrictions introduced on the foreign exchange market in 2014-2015, scrapping the mandatory sale of foreign currency received as foreign investment in Ukraine.

Respective NBU resolution No. 308 will come into effect on May 11.
The NBU also shortened by one day the term for the reservation of hryvnia funds by authorized banks for currency purchases on clients' behalf. Now foreign currency purchase orders can be settled on the third banking day (T+2), whereas previously it was possible on the fourth day (T+3). The NBU similarly reduced the period for transactions to transfer funds in the national currency to correspondent accounts with non-resident banks.

It is noted that such transactions still require the regulator's confirmation within the specified period in order to prevent counterproductive capital outflows. In this regard, information to be provided by banks for approval on May 5-6 will be endorsed by the NBU on May 11. Accordingly, information provided on May 10 will be handled on May 12, approval of applications of May 11 will be carried out on May 13, and so on.
In addition, the NBU lifted a ban on foreign currency purchases to pay for the products imported to Ukraine prior to January 1, 2015, under agreements with the debtor and/or creditor being replaced. In addition, a ban was canceled on the transfer of funds in the national currency in favor of non-residents through the correspondent account of a non-resident bank opened with an authorized bank.
The NBU expects the measures to liberalize the foreign exchange procedures will help boost foreign investment in Ukraine and facilitate settlements related to foreign economic activity without disturbing the currency market.
As UNIAN reported earlier, the NBU announced the gradual liberalization of the forex rules tightened in 2014-2015 in line the bailout road map, which was agreed with the International Monetary Fund.
On March 5, the regulator increased the limit of cash withdrawals from banks and ATMs up to the equivalent of UAH 50,000 in foreign currency and UAH 500,000 in national currency per customer per day. Also, the limit for the purchase of foreign currency by individuals was increased to the equivalent of UAH 6,000 per day.
At the same time, the NBU extended for another three months major currency restrictions for businesses, includes a requirement for the mandatory sale of 75% of foreign exchange earnings by exporters and a 90-day settlement deadline for import and export transactions; ban on early repayment of loans, credits in foreign currency under agreements/contracts with non-residents; ban on the payment of dividends to foreign investors abroad, and the obligation of banks to agree with the NBU applications for purchase of foreign currency exceeding the equivalent of $50,000.

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