NBU to take further steps towards currency market liberalization

Макроэкономика 22.01.2018 The National Bank of Ukraine (the NBU) is going to open the way for the repatriation of 2017 dividends and lift some restrictions on early repayment of external loans, the NBU website reported on Jan. 19, citing a presentation by Serhiy Ponomarenko, the head of the open markets department. These NBU steps are to be taken as part of a program of currency market liberalization adopted in 2016. The regulator’s decision should be taken upon the examination of pertinent information on planned operations by commercial banks’ clients. For the mid-term, the NBU is also considering weakening restrictions of currency purchases on the interbank market, to lower the requirement on business of the compulsory sale of 50% of foreign currency proceeds and lessen the limits on currency purchase for banks’ own needs, according to the presentation. In 2017, the volume of repatriated dividends to foreign investors was USD 1.8 bln. Evgeniya Akhtyrko: The NBU’s adherence to its currency liberalization program is a good signal to the market and particularly foreign investors as it shows the regulator’s ability to control the situation on the currency market while implementing inflation targeting. At the same time, a less-restricted currency market puts additional pressure on the government to secure the currency inflow under the financial account given Ukraine’s chronic C/A deficit. In this context, the call for a positive outcome of the current dilemma of Ukraine’s cooperation with the IMF and other IFIs is only strengthened.