Not just fixing the exchange rate. What other innovations have the National Bank announced?

Starting from 9 am on July 21, 2022, the National Bank of Ukraine adjusted the official exchange rate of the hryvnia to the US dollar by 25% and fixed it at UAH 36.5686/USD. USA. But in addition, the NBU announced a number of innovations that affect both those who are in Ukraine and those who live abroad, as well as businesses. DOU tells the details.

The main thing is that the conditions for setting the rate of sale and purchase of foreign currency in the cash and non-cash segments of the market remain unchanged. The sale and purchase of foreign currency by banks at the request of customers in the non-cash segment of the foreign exchange market will continue to be carried out at a rate that cannot deviate more than 1% from the official one.The exchange rate of currency sales in the cash segment of the foreign exchange market will continue to be determined by supply and demand in it.Starting from July 21, 2022, the NBU will allow banks to sell non-cash currency to citizens on deposit for a period of three calendar months or more (and without the right of early termination). The National Bank explained this decision by "balancing demand and supply in the foreign exchange market. The monthly limit is 50 thousand UAH (in equivalent). This will create an alternative to investing in cash currency, which will reduce the demand for it and pressure on the exchange rate in the cash segment of the foreign exchange market, the NBU believes.Starting from July 21, citizens will still be able to withdraw UAH 50 thousand (in equivalent) per month from Hryvnia payment cards abroad. However, the limit on withdrawing cash from Hryvnia payment cards abroad has been changed from monthly to weekly: UAH 12.5 thousand (in equivalent) for seven calendar days. The NBU has reduced the monthly limit on P2P transfers of citizens abroad from Hryvnia payment cards of Ukrainian banks from UAH 100 thousand (in equivalent) to UAH 30 thousand (in equivalent).The National Bank has set a monthly limit for settlements abroad using Hryvnia payment cards in the amount of UAH 100 thousand (in equivalent) from all customer bank accounts opened in the national currency. Since July 25, 2022, the permission for commercial banks to buy cash Hryvnia from a foreign financial institution for non-cash foreign currency has been canceled.The NBU board may introduce a separate procedure for conducting currency purchase operations by banks for their own needs.The National Bank has changed the algorithm for calculating the limits of the open currency position by banks in terms of not taking into account the increase in reserves for foreign currency assets of banks. Such a step will prevent the possibility of artificially inflating reserves by banks for foreign currency assets in order to increase the volume of purchases of foreign currency, the NBU says. The new rule will come into force on August 1, 2022. Details

According to the National Bank's estimates, the exchange rate correction will increase the inflow and, accordingly, the sale of foreign currency earnings by exporters, minimize the speculative component of market participants ' behavior and stabilize exchange rate expectations.

The correction of the official Hryvnia exchange rate will have only a limited impact on the acceleration of price growth, primarily due to the consequences of the war in recent months, the NBU noted. But fixing the official exchange rate at a new stable level will allow the National Bank to maintain control over price dynamics in Ukraine, the institution believes.

The National Bank stressed that all restrictions imposed since the beginning of the war are temporary.

"The level of international reserves is sufficient to ensure exchange rate stability, taking into account the prospects for receiving international financial assistance, the gradual establishment of Export Logistics and the growth of sales by exporters, as well as the expected decline in demand for foreign currency after the exchange rate correction," the NBU said.