2022-08-10T14:14:00+03:00 Economy 2024-08-15T05:38:37+03:00

Ukrainian news

NBU Allows To Buy Currency From Population At Rate Below Official Rate

NBU Allows To Buy Currency From Population At Rate Below Official Rate

The National Bank of Ukraine (NBU) allowed to buy currency from the population at a rate below the official rate.

This is stated in the message of the NBU, Ukrainian News Agency reports.

From August 6, 2022, the National Bank canceled the restriction, according to which banks and non-banking institutions had to buy cash currency from the population at a rate no lower than the official one.

As of July 21, the official exchange rate is 36.57 UAH/USD.

It is reported that the exchange rate in the cash segment of the foreign exchange market can either decrease or increase depending on market supply and demand.

Considering this, the requirement to buy currency at a rate not lower than the official rate could potentially limit the strengthening of the hryvnia.

So the National Bank removed the corresponding restriction.

Individual financial institutions may use this to increase their own margins, but this practice will not become widespread.

High competition in the cash segment of the foreign exchange market will be an obstacle.

If the institution sets an undervalued cash currency purchase rate that is significantly different from the selling rate, then it risks losing its customers.

Citizens can choose any other financial institution, given the large number of players in the cash segment of the foreign exchange market.

The power of competition is well illustrated by the fact that the difference between the average rates of purchase and sale of cash currency by banks did not change after the removal of the corresponding restriction, while in non-bank institutions, on the contrary, it narrowed from 0.4 to 0.25 hryvnias for 1 dollar during August 5-8.

As Ukrainian News Agency earlier reported, in order to prevent speculation and artificial increase of the exchange rate, the National Bank of Ukraine has prohibited non-bank currency exchange offices from displaying exchange rate boards outside the cash desks.

From July 27, the National Bank of Ukraine allowed banks to sell in the cash segment of the foreign exchange market half of the non-cash currency purchased from citizens from April 13, 2022, in addition to the sale of cash currency purchased from the same date.

In July, the National Bank reduced the monthly limit on transfers of citizens abroad from hryvnia payment cards of Ukrainian banks from UAH 100,000 to UAH 30,000.

On July 21, the NBU adjusted the official hryvnia exchange rate by 25% to 36.5686 UAH/USD.