NBU accuses nonbank currency changers of artificially devaluing hryvnia, imposes restrictions on them

MOSCOW. Aug 1 (Interfax) - Nonbank currency exchange outlets, which account for three quarters of Ukraine's official cash foreign currency market, have begun to artificially raise the exchange rate in this segment, the National Bank of Ukraine (NBU) said in a statement.

"Such an increase of the exchange rate seems unfounded against the backdrop of the relative stabilization of demand and supply in the noncash segment of the forex market and could indicate exclusively speculative approaches to the setting of rates by nonbank institutions," the NBU said.

The hryvnia's exchange rate against the U.S. dollar broke through the threshold of UAH40/$1 last week, despite the NBU's attempts to stop its slide, and was already at UAH41/$1 at nonbank exchange points by the end of the week.

Destabilizing the situation with the cash exchange rate amid the military conflict in the country in order to earn an additional margin in the segment where the public buys foreign currency is unacceptable, the NBU said.

In light of this, the NBU has tightened requirements for nonbank exchange points for organizing trade in cash forex. Among other things, now information about set purchase/sell rates for foreign currencies must be presented to the public only in the form of a copy of an order.

"This information will be posted exclusively at the cash desks of institutions and [their] divisions. At the same time, nonbank financial institutions and postal service operators are prohibited from informing about set purchase and sell rates for foreign currencies outside of the cash offices of institutions and their divisions, and attracting additional excessive attention to them with any digital signifiers or symbols," the NBU said.

The NBU also again required institutions to provide information about the registry of premises in which forex transactions are made and conduct video surveillance, and intends to review technical requirements for cash offices.

"Fourthly, in order to strengthen control over compliance with requirements to conduct purchases and sales of forex exclusively using payment transaction recorders, information about the used payment transaction recorders will be provided to the National Bank," the NBU said.

This will make it possible to tighten tax discipline, since nonbank exchange points evade tax on profit, which amounts to an average of UAH165 per outlet for six months, the NBU said.

"These changes do not apply to banks, since as of today there have been virtually no reported abuses by them [...] However, in the event of the discovery of such abuses, similar regulation will be introduced for banking institutions as well," the NBU said.

The relevant NBU order, dated July 29, has already gone into effect, except for certain provisions about outfitting exchange points with video surveillance systems, which go into effect on August 3.

The NBU devalued the official exchange rate of the hryvnia by 25% to UAH36.5686/$1 from UAH29.2549/$1 on July 21 in light of changes in Ukraine's economic fundamentals. "This step will make it possible to increase the competitiveness of Ukrainian producers, bring exchange rate conditions for various groups of businesses and the public closer together and support the stability of the economy," the NBU said.

The hryvnia's official exchange rate against the U.S. dollar remains fixed.

In order to ease pressure on the hryvnia on the cash market, the NBU allowed banks to sell individuals noncash foreign currency in amounts of up to UAH50,000 per month on the condition that the money is kept in a deposit for at least three months. The NBU also decided to sell foreign currency for the cash forex market, which it had not done before.