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
Ukraine’s international reserves in March, according to preliminary estimates of the National Bank of Ukraine (NBU), increased by 18%, or $6.7 billion – to $43 billion 762.7 million.
“Such dynamics is due to significant (more than $9 billion) volumes of receipts from international partners, which exceeded the net sale of currency by the National Bank and the country’s debt payments in foreign currency,” the NBU website explained on Friday.
In addition, the National Bank noted that $9.32 billion was transferred to foreign currency accounts of the Cabinet of Ministers in March, while $363.5 million was paid for servicing and repayment of the state debt.
As the regulator noted, Ukraine also paid $728.5m to the International Monetary Fund.
Among other factors determining the volume of reserves, the NBU named operations on the foreign exchange market: in March, the regulator’s net sale of foreign currency amounted to $1.79bn, which is 18.5% more than in the previous month.
According to balance sheet data, the NBU sold $1.81 bln on the foreign exchange market and bought $25.9 mln in reserves.
The central bank also indicated that the current volume of reserves was positively affected by the revaluation of the value of financial instruments, adding $266.3 million.
“The current volume of international reserves provides funding for 5.8 months of future imports,” the regulator stated.
As reported, the NBU in January reduced the forecast of Ukraine’s international reserves at the end of 2024 to $40.4 billion from $44.7 billion and to $42.1 billion from $45 billion at the end of 2025. Earlier, Experts Club analytical center and Maxim Urakin released a video analysis of how the GDP of the world’s countries has changed in recent years, more detailed video analysis is available here – https://youtu.be/w5fF_GYyrIc?si=BsZmIUERHSBJrO_3 Subscribe to Experts Club YouTube channel here – https://www.youtube.com/@ExpertsClub
EXPERTS CLUB, GDP, International reserves of Ukraine, MACROECONOMICS, NATIONAL BANK OF UKRAINE, NBU, URAKIN
The volume of currency purchases by the Ukrainian population in January 2023 exceeded the volume of its sales by $1 billion 103.2 million compared to $1 billion 26.2 million in December and $621.8 million in November, which was a new record since October 2012, the National Bank of Ukraine (NBU) said.
According to its website, such a result in January was once again provided by the cash currency segment, where its net purchase increased to $885.2m from $807.5m in December and $375-380m in November-October, while the balance of purchase and sale of non-cash currency remained at the level of the previous month – $218.0m.
As reported, the National Bank of Ukraine (NBU), which has held the official hryvnia exchange rate at $36.5686 UAH/$1 since the end of July 2022, has switched to a regime of managed exchange rate flexibility since October 3. Since late November, under the pressure of increased demand in the market, an obvious trend towards weakening of the national currency has been formed. Despite the increase in the National Bank’s interventions to $3.55 billion, the dollar on the interbank in December rose in price by 4.5%, or UAH 1.65 – to UAH 38.002/$1, and on the cash market due to the jump of about UAH in the last days of the year, its growth in December amounted to 5.3%, or about UAH 2 – to about $39.40 UAH/$1.
At the same time, at the end of January, the official hryvnia exchange rate strengthened to 37.5627 UAH/$1, while in the cash market – to 38.20 UAH/$1, and the spread between them narrowed again.
According to the NBU, after the exchange rate hike in late December, the first ten days of the month net purchase of currency on the non-cash market amounted to $10-30 mln, but after the exchange rate stabilized and the spread narrowed, the volume of net purchases fell significantly.
At the same time, in the cash market net purchase volumes, which averaged $40.5 mln per day in the first ten-day period of January, decreased to $34 mln in the middle of the month, but in the last ten-day period grew to $48.4 mln.
According to some market participants, a new factor in the cash market, as it already happened at the end of last year, may be the adoption of the bill on mobilization, which provides for the arrest of accounts of those who do not appear at the TCC on summons.
According to the National Bank, in general, the volume of non-cash currency sales by households in January decreased to $276.7 million from $311.7 million in December, while the volume of purchases – to $494.7 million from $530.3 million.
In the cash market in January, purchases fell to $1 billion 890.9 million from $2 billion 65.9 million, as did sales to $1 billion 5.8 million from $1 billion 258.4 million.
As reported, in total for 2022, according to official statistics, the population bought $880.1 million more currency than sold, including net purchase of cash currency amounted to $1.01 billion. For 2023, net purchase of currency by the population reached $4 billion 792.8 million, including cash – $3 billion 632.1 million.
In the non-cash foreign exchange market, the purchase of currency by bank customers in January decreased more significantly – to $5.06 billion from $7.06 billion in December, while sales – not so significantly: to $4.17 billion from $4.91 billion.
As a result, net purchases fell to $0.88 billion in January from $2.15 billion in December, back to May-June 2023 levels.
As for the volume of transactions between banks, after December’s all-time record of $5.99bn, it fell to $4.34bn in January, still significantly higher than before the exchange rate liberalization.
The National Bank of Ukraine has included Aston Ukraine LLC and Insurance Bureau Kompanion LLC in the State Register of Insurance and Reinsurance Brokers, according to the regulator’s website.
According to the resource Opendatabot, LLC “Aston Ukraine” (Kiev) was registered in May 2016. The authorized capital of the company – 597,8 thousand UAH. Its income for 2022 amounted to UAH 1.721 million, net profit – UAH 4.3 million, assets – UAH 700.6 thousand, liabilities – UAH 26 thousand. The staff consists of 10 employees.
Insurance Bureau “Kompanion” LLC was registered in August 2014. Authorized capital – UAH 53 thousand.
As reported, as of January 1, 2024, 23 insurance and reinsurance brokers were registered in Ukraine.
Aston Ukraine, Insurance Bureau Kompanion, NATIONAL BANK OF UKRAINE
On January 8 and 9, 2024, the National Bank of Ukraine (NBU) excluded 42 non-bank financial institutions from the State Register of Financial Institutions and four more – from the Register of persons who are not financial institutions but have the right to provide certain financial services.
According to the regulator’s website, the reason for this decision was the absence of valid licenses for the provision of financial services in these companies as of January 1, 2024.
According to the NBU, limited liability companies Morgan Capital, New World FC, Finextra FC, Motor City Autocenter, DSD Finance, Inform-Aktiv, FC Factoring Alpha, FC Contract Plus, FC Fintakt, FC HIT, FC HIT, “Viridi-Lux, Regional Credit, FDS Finance, FC Proxima, Paritet Finance, FC Finaktiv, FC Argo, Factoring Company Debt Obligations Fund, FC Ukrainian Capital, FC Avila Finance, Europartner Finance, FC Fingroup Factor and FC Fintech Solutions.
Also excluded from this register are: “Lombard” Dobrye Traditions “My Capital” and “Guarantee of Success”, “Kucher and company pawnshop “Partner”, “Lombard Privat” Sich S.V. and company, “Your Lombard” Lukacek and company, “Lombard” Kuzmin and Kuzmin “Eurocom”, “Eurolombard” Astapenko A.A. and Svetashova T.V. “, “Lombard “Reverse” LLC “Templeria” and company”, “Lombard Pledge Society “Diamantovy Dom” LLC “Moneta” and companies”, “Lombard Pharmacia and co.” “Khrushcha and companies “Lombard AVK”, “Lombard “Alatir” LLC “Trisel” and company”, “Lombard “Vista” LLC “I-TE 911″ and company”, “Lombard – Karkuzaev and company”, “Lombard” Nevedrov Yu. A. and company”, “Lisenko and company-lombard”, “Pawnshop “Credit VIP-Gold and company”, “Universal pawnshop “Groshovychok” LLC “Financial Assistance” and company”, “Pawnshop “Premium” Velichko Alexander Viktorovich and company” and PJSC “Sempre System Finance”.
In addition, limited liability companies Agrarno-Gruzovaya Kompaniya, Alfa Leasing Ukraine, Kar Invest Ukraine, Light Leasing were excluded from the Register of persons who are not financial institutions, but have the right to provide certain financial services.
NATIONAL BANK OF UKRAINE, Ukraine's non-banking financial market
Net sales of dollars by the National Bank of Ukraine (NBU) last week fell to $789.3 million from $891.8 million in the last week of last year, data on the regulator’s website showed on Friday. In the first half of the week, for which the central bank has already published the data, the purchase of currency by bank clients was growing: from a minimum of $56.52 million on Monday to $202.69 million on Wednesday.
As a result, the NBU on Wednesday weakened the official hryvnia exchange rate by 0.08%, or 3 kopecks, to a new low of UAH 38.1159/$1.
Nevertheless, on Thursday the demand weakened slightly, as a result the exchange rate strengthened by 0.20%, or by 7 kopecks, to 38.0412 UAH/$1, and on Friday, the last day of trading, the hryvnia weakened again slightly – by 0.10%, or by 3 kopecks, to 38.0775 UAH/$.
Overall, since Monday, the dollar has appreciated by 0.20%, and since the National Bank’s transition to the regime of managed flexibility on October 3, 2023, the dollar has become more expensive by 4.13%, or 1 UAH 51 kopecks. A pronounced trend towards weakening of the national currency began on November 26 last year, and since then the hryvnia has devalued by 5.73%.
In the cash market on Friday, the dollar rose by 1% to UAH 39.49/$1, returning to the pre-New Year dynamics after a rebound in the first days of the year.
Overall, the NBU’s net sales in December rose to about $3.57 billion from $2.46 billion in November, $3.34 billion in October and $2.69 billion in September. Last month, the Finance Ministry raised $5 billion in external financing, which boosted international reserves by 4.4% in December to $40 billion 507.9 million, the second highest in history after July 2023.
