NBU allows banks to sell more foreign currency

On September 5, the National Bank updated the currency restrictions set earlier. The updates will affect both the population and businesses. In particular, businesses were banned from buying additional currency until all available currency runs out, and banks will be able to sell more currency to the population.

From September 6, 2022: banks will be able to sell more currency to the public.

"The volume of cash currency that the bank can offer to the population will include the entire volume of non — cash currency purchased from citizens from April 13, 2022, and not half of it," the report says.

According to the NBU, such a step will help stabilize the situation in the cash segment of the foreign exchange market and will not have a significant impact on Ukraine's international reserves.

For settlements in foreign currency, businesses must first use the funds they already have.

"The National Bank has determined that to make payments in foreign currency, an enterprise must first use the foreign currency it has, and then, if necessary, buy it on the foreign exchange market of Ukraine," the NBU said.

The corresponding norm will reduce the demand for foreign currency and allow preserving Ukraine's international reserves, which are important for ensuring defense needs, stable operation of the country's economy and financial system, the NBU believes.

Currency supervision of banks is mandatory.

Banks do not have the right to terminate currency supervision over whether Ukrainian businesses comply with the deadlines for settlements on the export or import of goods on the basis of documents on termination of obligations by netting.

"This will help to increase the transparency of cash flows on Export-Import Operations," the regulator stressed.

Restructuring of external debt of bank customers is changing.

The temporary rules introduced by the National Bank do not allow transferring foreign currency abroad for repayment and servicing of debt obligations to non-residents by Ukrainian enterprises. This norm is necessary for the preservation of Ukraine's international reserves, since making the corresponding payments in full would require a significant amount of currency resource that is in short supply during the war.

"At the same time, taking into account the urgent need to settle the external debt of businesses, the National Bank determined that from now on banks should recommend clients with existing debts to non — residents to apply to creditors with a proposal to restructure the debt on terms not worse than the restructuring of the external debt of the Government of Ukraine," the NBU notes.