28 February 2014
Update: Restrictions on foreign currency transactions and measures aimed at stabilising Ukrainian financial sector

Effective as of 28 February 2014, The National Bank of Ukraine (the “NBU”) has amended its earlier Resolution No. 49 “On measures in respect of banking activities and carrying out of foreign currency transactions” (the “Amended Resolution”) introducing certain restrictions on transactions in foreign currency, as well as measures enhancing stability of banking and financial activities.

Restrictions on purchase of foreign currency

According to the Amended Resolution, Ukrainian banks are temporarily prohibited from purchasing of foreign currency on Ukrainian interbank foreign exchange market whenever such foreign currency is intended for:

  • any early repayment by Ukrainian residents of any loans, credits or financial aid raised from foreign residents in any foreign currency (including in case of entry into any amendment agreement shortening maturity of any such borrowings). Such prohibition applies to early repayment by Ukrainian residents of principal, interest and any other payment obligations under credit, loan facility arrangements and/or financial aid agreements, in each case with foreign lenders/donors;
  • investing abroad by Ukrainian residents; and
  • a partial coverage of insurance reserves by insurers.

Ukrainian residents shall only be entitled to perform such payment transactions out of their own (and not borrowed or purchased) funds in foreign currency.

Purchase of foreign currency for non-commercial transactions of individuals

The NBU has established a monthly limit of the total amount of foreign currency that may be purchased by an individual for the purposes of transfers of FX funds abroad under any non-commercial transactions. Such limit currently amounts to an equivalent of UAH 50,000 in any relevant foreign currency. Such monthly limit, however, does not apply to certain types of non-commercial transactions, such as, among others, payment for education abroad, medical treatment abroad and transfer of FX funds purchased for UAH received as salary by foreign residents employed in Ukraine.

Minimum period for purchase of foreign currency

The NBU has established the minimum period for purchase of FX funds by Ukrainian banks under instructions of their clients (individual entrepreneurs and legal entities). In particular, any such purchase of FX funds shall be made no earlier than on the sixth (6th) banking day after submission of the relevant instruction and transfer of UAH funds to an interim account of the bank. The above requirement do not apply to the purchase of foreign currency for the purpose of payment of interest under foreign currency denominated credit/loan/facility agreements.

For purchase of FX in the interbank currency market, banks are entitled to perform FX purchase transactions on SPOT, TOD, TOM terms only, no FX forwards are allowed. Ukrainian banks shall also, on a daily basis, report to the NBU on all the instructions to purchase FX funds received from their clients.

New regulations in respect of banking activity

The NBU has temporarily established zero rate on provisioning by Ukrainian banks in respect of FX funds raised from any foreign residents, provided that the maturity of such borrowings is up to (and including) 183 calendar days. For the purposes of timely payment of salaries, social and certain other payments, Ukrainian banks shall also ensure (i) due performance of cash transactions; (ii) continuous functioning of ATMs; and (iii) continuous disbursement of cash for the clients.

Ukrainian banks may repay foreign currency denominated deposits in UAH at the exchange rate established as at the date of performance of such transaction. Additionally, banks shall not disburse to their clients any foreign currency funds (in cash) in excess of an equivalent of UAH 15 000 per day calculated at the official FX exchange rate established by the NBU. This requirement shall be effective until 28 March 2014.

The Amended Resolution does not provide for a particular term of effectiveness of the above measures and such measures shall remain effective until adoption by the NBU of the respective separate resolution.