The National Bank of Ukraine (NBU) on Thursday corrected the official exchange rate of the hryvnia against the US dollar, lowering it by 25% – from UAH 29.2549/$1 to UAH 36.5686/$1, taking into account changes in the fundamental characteristics of the Ukrainian economy, NBU said in a statement.
„Such a step will increase the competitiveness of Ukrainian producers, bring together the exchange rate conditions for different business groups and the population and support the stability of the economy,” the National Bank notes.
The NBU emphasizes that the official hryvnia exchange rate to the US dollar remains fixed.
„With high uncertainty, a fixed official exchange rate against the US dollar is the main anchor for stabilizing expectations and a key means of achieving the NBU’s priority goals. They are to ensure price and financial stability, which is an important condition for economic recovery,” the regulator explains.
According to the estimates of the National Bank, the exchange rate correction will increase the inflow and, accordingly, the sale of foreign exchange earnings by exporters, minimize the speculative component of the behavior of market participants and allow stabilizing exchange rate expectations.
At the same time, the conditions for setting the rate of selling and buying currency in the cash and non-cash segments of the market remain unchanged, in particular, the sale and purchase of 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 exceed 1 % deviate from the official, and in the cash segment – focus on supply and demand.
In addition, from July 21, the NBU allowed banks to sell non-cash currency to citizens with subsequent placement on deposit for a period of three calendar months without the right to early termination within the monthly limit of UAH 50,000. (in equivalent).
Such a decision will create an alternative to investing in cash, which will reduce the demand for it and pressure on the exchange rate in the cash segment of the foreign exchange market.
In addition, the National Bank changed the limit on cash withdrawals from hryvnia payment cards abroad from UAH 50,000. per month up to 12.5 thousand UAH. (in equivalent) for seven calendar days.
The monthly limit on P2P transfers of citizens abroad from hryvnia payment cards of Ukrainian banks has also been reduced from UAH 100,000 to UAH 30,000. (in equivalent).
The National Bank also set a monthly limit on settlements abroad using hryvnia payment cards in the amount of UAH 100,000. (in equivalent) from all customer bank accounts opened in national currency.
In addition, on July 25, 2022, the regulator will cancel permission for commercial banks to purchase hryvnia in cash from foreign financial institutions for non-cash foreign currency.
From August 1, the Central Bank will change the algorithm for calculating the limits of the open foreign exchange 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 artificial overstatement of reserves by banks on foreign exchange assets in order to increase the volume of purchases of foreign currency,” the NBU notes.
The corresponding changes were adopted by the resolution of the NBU Board of July 21, which was published on the website of the Central Bank.