Further to gradual liberalization of currency control restrictions, the National Bank of Ukraine (the "NBU") amended the NBU Board Resolution No. 18 [1] and clarified the conditions for purchasing of foreign currency by legal entities and individual entrepreneurs.
With effect from 21 February 2024, banks, when purchasing foreign currency on behalf of a client, must take into account the client's unfinished currency swap transactions with banks under which the first part of the transaction (the sale of foreign currency by the client to the bank) was performed. Previously, banks were not allowed to buy foreign currency for a client if the client had foreign currency funds on its accounts.
Same as previously, legal entities and private entrepreneurs must, first, use their own foreign currency deposited onto the accounts for settlements and then, if no own currency is available, purchase foreign currency on the Ukrainian interbank market.
The entities and private entrepreneurs are required by the amendments to notify the commercial bank about foreign currency they sold under the first part of foreign exchange (FX) swap transactions which is being carried out with banks, including information about foreign currency funds available on its accounts.
In addition, the NBU has also clarified certain aspects of banks’ supervision over currency settlements under export contracts. Specifically, banks may take the export transactions off currency control if the funds from a non-resident under export contract have been actually paid in foreign currency to the account of resident. From now on, payments received by residents in UAH (hryvnia) may not account for due satisfaction of pecuniary obligations under export contracts.
According to NBU, the changes are aimed at returning foreign currency proceeds under the export contracts to Ukraine and preventing unproductive outflow of capital outside the country which is crucial for maintaining international currency reserves and FX market stability.
[1] Resolution of the NBU Board "On Amendments to the Resolution of the Board of the National Bank of Ukraine No. 18 dated 24 February 2022" No. 24 dated 20 February 2024, entered into force on 21 February 2024
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