In January 2025, the volume of foreign currency purchases by the Ukrainian population exceeded the volume of its sales by $1 billion 479.8 million, which is 34.1% higher than in January 2024 and 13.6% higher than in December 2024 and is the highest figure since December 2012.
According to the NBU’s website, compared to December, cash currency sales decreased by $157.1 million, while purchases decreased by only $63.4 million to $2 billion 430.9 million, resulting in an increase in the negative balance to $1 billion 290.3 million.
In addition, in January of this year, the sale of non-cash foreign currency decreased by $69.1 million, while its purchase increased by $14 million to $460 million, which led to an increase in the negative balance to $189 million.
At the same time, it is worth noting that in the first half of January, when the hryvnia was weakening, the volume of purchases was higher, and by the end of the month, after the national currency strengthened, the daily negative balance was reduced, and only on the last day of the month and in early February was a significant increase in demand recorded again.
In the legal entities market, after a jump in purchases of foreign currency by bank clients in December to $8.41 billion from $6.22 billion in November, in January, purchases decreased to $5.56 billion, which is only 10% higher than in January last year.
At the same time, the sale of foreign currency by bank clients also fell significantly in January this year, to $3.78 billion from $4.96 billion in December, which is 10% less than in January last year.
As for the volume of transactions between banks, it also decreased compared to December – from a record high of $7.96 billion since the beginning of the war to $6.12 billion. However, this figure is 40.8% better than in January 2024.
As reported, the official hryvnia exchange rate in the first half of January fell from 42.0295 UAH/$1 to a new all-time low of 42.2841 UAH/$1, but in the second half of the month it strengthened to 41.8242 UAH/$1.
The National Bank’s net sale of foreign currency on the interbank market in January decreased to $3.75 billion from a record high of $5.28 billion in December, although this is significantly higher than the January-2024 figure of $2.53 billion.
In total, the volume of foreign currency purchases by the Ukrainian population in 2024 exceeded the volume of its sales by $12.22 billion, which is 2.5 times or $7.43 billion more than in 2023, but thanks to large-scale foreign aid, international reserves increased to $43.8 billion last year.
In 2024, the official hryvnia exchange rate against the US dollar weakened by 10.6%, or UAH 4.02, including 0.9%, or 37 kopecks, in December.
Net sale of dollars by the National Bank of Ukraine (NBU) increased this week to $533.4m from $507.8m a week earlier, according to the regulator’s data.
According to them, the central bank sold $533.6m on the interbank market and bought back $0.15m.
The official hryvnia exchange rate weakened by 37 kopecks during the week, in particular, on Friday the national currency exchange rate fell by 17 kopecks to UAH 39.7206/$$. – to 39.7206 UAH/$1.
In the cash market, the dollar also rose in price during the week: by about 12 cents to UAH 39.95/$1. – up to UAH 39.95/$1, including on Friday – by 6 kopecks.
As evidenced by the data, which the NBU managed to publish for this period, from Monday to Wednesday, the negative balance between the volume of currency purchases and sales by the population increased from $30.2 million to $56.9 million.
Last Friday, May 3, the National Bank announced the largest package of easing of currency restrictions for businesses since the beginning of the full-scale war, which provides for the abolition of all currency restrictions on imports of works and services, provides the ability of businesses to repatriate “new” dividends, provides an opportunity to transfer funds abroad on leasing and rent.
In addition, the new steps of currency liberalization provide for the easing of restrictions in terms of repayment of new foreign loans and interest on “old” foreign loans, as well as easing restrictions for the transfer of foreign currency from representative offices in favor of their parent companies.
As reported, the NBU increased its net foreign exchange interventions on the interbank market in April by 27.7% to $2.283bn, compared to $1.370bn in the same period last year.
On April 24, Ukraine received the second tranche of transitional financing in the amount of EUR1.5 billion (UAH 63.32 billion in hryvnia equivalent) under the European Union’s Ukraine Facility instrument, and the country also received UAH 2.7 billion in grants from international partners last month.
Ukraine’s international reserves in April decreased by 3.1%, or $1.4 billion – to $42 billion 399.5 million. On April 25, the NBU raised their forecast for the end of this year to $43.4 billion from $40.4 billion and to $44.3 billion from $42.1 billion – at the end of next year.
The National Bank of Ukraine says it is implementing the largest package of easing currency restrictions for businesses since the start of the full-scale war to improve the conditions for doing business in Ukraine and the entry of domestic businesses into new markets, as well as supporting economic recovery and facilitating the inflow of new investment into the country.
“First, all currency restrictions on imports of works and services are abolished. Second, the ability of businesses to repatriate ‘new’ dividends is ensured. Third, the possibility to transfer funds abroad on leasing/renting is provided,” the NBU said in a press release on Friday evening.
“Fourth, restrictions in terms of repayment of new external loans are relaxed. Fifth, the possibility to repay interest on ‘old’ external loans is provided. Sixth, restrictions in terms of transferring foreign currency from representative offices in favor of their parent companies are relaxed,” the regulator added.
It is specified that these and a number of other technical changes were introduced by the NBU Board Resolution No. 56 of May 3, 2024 to the so-called “military” Resolution No. 18 of February 24, 2022. The vast majority of the document’s provisions come into force from May 4, 2024, and only in terms of repatriation of new dividends – from May 13, 2024.
The regulator believes that this will support Ukrainian producers and provide them with the opportunity to enter foreign markets, which in turn will contribute to a gradual increase in export revenues.
It is indicated that repatriation of dividends by businesses will be allowed only for dividends accrued based on performance after January 1, 2024.
“This relaxation does not apply to the payment of dividends at the expense of retained earnings for previous periods or reserve capital,” emphasized the National Bank.
In addition, the regulator set a monthly limit for repatriation of “new” dividends at EUR1 million equivalent in order to minimize risks to macro-financial stability. It is noted that control over compliance with this norm will be ensured thanks to the NBU’s automated information system “E-limits”.
“Providing an opportunity to repatriate “new” dividends will contribute to the inflow of new investments in Ukraine, minimize the risks of curtailing the activities of enterprises with foreign capital and support the economy,” the National Bank believes.
As for the easing of restrictions on servicing and repayment of “new” foreign loans and repayment of “old”, the NBU has reduced the minimum period of use of the loan, the funds for which come from abroad after June 20, 2023 on the accounts of residents, from three to one year, when reaching which it is allowed to buy foreign currency for its repayment. Thus, the ban on the purchase of foreign currency for repayment of “new” loans will apply to loans for up to one year.
In addition, the NBU will allow businesses, regardless of the period of use of “new” loans to buy foreign currency to pay interest on them.
“All this will contribute to increasing opportunities for Ukrainian businesses to attract new external loans not only from official partners, but also from private investors,” the release said.
Moreover, according to it, resident borrowers will be able to make transfers in foreign currency to repay interest on “old” external loans, which, according to the terms of the agreement, are payable from February 24, 2022. However, under one loan agreement for interest payments overdue as of May 1, 2024, borrowers will be able to transfer no more than 1EUR million equivalent per calendar quarter.
Also, according to the release, legal entities and individual entrepreneurs will be able to transfer funds abroad for settlements under leasing or rental contracts without additional restrictions on the subject of such a contract, as well as the date of its conclusion.
The National Bank reminded that previously such permission was only for leasing or renting vehicles.
Regarding the permission for representative offices of foreign companies to transfer foreign currency to the accounts of parent companies, it is specified that the central bank will allow international card payment systems and foreign airlines to buy and transfer foreign currency abroad to the account of a non-resident legal entity, but for such operations will be set a monthly limit of EUR5 million in equivalent.
According to the regulator, this will contribute to further development of cashless settlements in Ukraine.
ACTIVITIES, BUSINESS, CURRENCY, ECONOMY, INVESTMENTS, NATIONAL BANK OF UKRAINE, UKRAINE
The Reserve Bank of Zimbabwe is putting into circulation a new currency – Zimbabwe Gold (Zimbabwe Gold, or ZiG), writes MarketWatch with reference to its message.
ZiG will replace the Zimbabwean dollar and will be backed by gold, other precious metals and foreign currencies.
The new currency will help simplify monetary and financial relations, bring certainty and predictability to them, said the head of the national central bank John Mushayaavanhu.
The central bank will set the interest rate for borrowing in Zimbabwean gold at 20 percent against a global maximum of 130 percent for the former currency.
Banks will start converting account balances into the new currency on Friday. It will be put into circulation on Monday at a rate of 13.56 gold pieces per U.S. dollar, CNBC Africa reported.
Zimbabwe’s annual inflation accelerated to 55 percent in March from more than 47 percent a month earlier amid the collapse of the former national currency and the country’s economy’s reliance on the U.S. dollar.
The Reserve Bank of Zimbabwe also cited problems with change in payments, including its issuance in the form of coupons or candy.
The share of the U.S. dollar in international settlements within the SWIFT system rose to 46.5% in July from 39.4% a month earlier, according to the monthly RMB Tracker report released by SWIFT.
Bloomberg agency calls the dollar’s July performance a record high. Ten years ago, the currency accounted for just over a third of all settlement volume.
The U.S. dollar remains the leader in terms of share in international settlements. The second position is still occupied by the euro, whose share last month fell to a historically low 24.4% from 38.4%, the third – the pound sterling (7.6% in July against 6% a month earlier), the fourth – the yen (3.5% against 2.7%), the fifth – the yuan (3.1% against 2.2%).
In 2012, the single European currency held 46% of settlement volume. This is its peak figure.
Meanwhile, the share of the Chinese currency exceeded 3% for only the second time in the history of observations. In 2010, it was about 0.03%.
Volumes of currency purchase by Ukrainian population in January 2023 exceeded volumes of its sale by $564 million as compared to $463.2 million in December last year, this figure is growing for the sixth month in a row, the National Bank of Ukraine (NBU) said.
According to its website, if earlier the “net” purchase was formed mainly in the cash market, in December – almost equally in the cash and non-cash markets, in January it is already mainly in the cash market.
At the end of September last year, the National Bank raised the limit on the purchase of non-cash currency by physical persons from 50 thousand UAH to 100 thousand UAH a month, under its placement on deposit for at least three months, which stimulates such operations: in January, non-cash currency purchases rose to $ 523.9 million from $ 450.5 million in December, $362.2 million – in November.
The sales of non-cash hard currency, by contrast, decreased to $153.4 million from $220.2 million in December and $211.1 million in November.
As for cash currency, its purchase and sale decreased compared to December: purchase – from $1.425 billion to $1.268 billion, while sale – from $1.191 billion to $1.075 billion.
According to these data of the NBU, the turnover of the official foreign currency cash market in January this year amounted to 71.9% of the turnover in pre-war January 2022, while non-cash currency transactions – 60.6%.
As reported, the population bought $880.1 million more currency than sold, including $1010.0 million more cash currency bought than sold, according to official statistics, for 2022 as a whole.
At the moment, the dollar exchange rate in the cash market is about 39.9 UAH/$1, while the National Bank set the official rate from July 21, 2022, at 36.5686 UAH/$1. The dollar is quoted at about 0.6 hryvnia cheaper than a month ago.
