27 Jul 2022 14:40

NBU allows banks to sell 50% of earlier bought cashless foreign currency to citizens in cash

MOSCOW. July 27 (Interfax) - The National Bank of Ukraine (NBU) has allowed banks to sell citizens not only earlier purchased cash foreign currency but also 50% of the overall amount of cashless foreign currency bought from citizens over that period, the Ukrainian media said on Wednesday, citing the NBU press service.

"This decision is expected to help increase supply in the cash segment of the forex market, eventually causing devaluation pressure to weaken," the press service said.

Additional pressure on the NBU's international reserves as banks start taking advantage of its permission will be moderate and manageable, it said.

Only cash foreign currency will be sold in Ukraine, the press service said.

The cash hryvnia was down UAH 0.6-0.8/$1 before noon on Wednesday, but recouped 0.3-0.4 UAH/$1 in the second half of the day, thanks in part to the NBU's decision, Ukrainian media reported.

According to the National Bank, banks purchased about $700 million of non-cash currency from the population in April-June, while cash purchases totaled $1.11 billion.

As a result, if by Wednesday afternoon, the rate had surpassed UAH 40/$1 both on the "black" market and at banks, then as of 15:30, it had returned to the level of UAH 40/$1.

According to NBU statistics, the central bank on Monday bought a record volume of currency since February 24 - about $680 million, but returned to sales on Tuesday, with a modest volume of about $15 million sold.

On July 21, the NBU raised its official exchange rate by 25% to UAH 36.57/$1 and imposed additional restrictions on card payments abroad, while last week net sales of foreign currency dropped to $86 million from $580.7 million a week earlier and almost $1 billion in the previous four weeks.

Market participants warned that information about the Naftogaz default the day before could have had a negative impact on the market on Wednesday.