27 Jan 2023 09:49

NBU to again increase reserve requirements for banks in Feb and March

MOSCOW. Jan 27 (Interfax) - The National Bank of Ukraine (NBU) has decided to again raise reserve ratios for banks as of February 11 from 5% to 10% in national currency and from 15% to 20% in foreign currency, Ukrainian media reported, quoting an NBU press release.

The NBU raised reserve requirements for banks in January as it said it would do in December, and as of February 11 "banks' required reserve ratios will be raised by 5 pp for demand deposits from, and current accounts of, businesses and households; for deposits from, and current accounts of, nonresident banks; and for loans from international (other than financial) and other organizations," the NBU said.

This will help to further increase the appeal of hryvnia assets, support exchange rate stability and gradually slow inflation, the NBU said.

In addition, banks' required reserve ratios will be raised by another 10 pp for household hryvnia and foreign currency demand deposits and current accounts. Banks "will not be allowed to use benchmark domestic government debt securities to meet these reserve requirements," the NBU said.

"The NBU expects that these measures will help decrease the liquidity surplus in the banking system. This, in turn, will encourage the banks to compete more actively for term deposits, which will push up interest rates on hryvnia assets and increase the share of term deposits. This will make the FX market more resilient to situational factors, while also enabling the NBU to ease administrative restrictions for businesses and households in future," the NBU said.

The NBU raised reserve ratios for current accounts by 5 pp, from zero to 5% in hryvnia and to 15% for foreign currency demand deposits as of January 11.