National Bank of Ukraine Imposes New Restrictions on Foreign Currency Transactions

Squire Patton Boggs,
Kyiv, Ukraine, Wed, Feb 25, 2015

Effective 25 February, the National Bank of Ukraine (NBU)introduced a ban for authorized banks to purchase foreign currency for theirclients, lasting through 27 February. (Regulation No. 130 dated 24 February2015). The ban also applies to previously filed hard currency purchaseapplications.

Effective 24 February, NBU introduced other restrictions oncertain hard currency transactions in order to impose currency discipline andto strengthen the national currency (Regulation No. 124 dated 23 February2015).

Measures provided by the new regulation apply solely toimporters. They include:

1. Ban on bank loans in Hryvnia to purchase foreign currency.This restriction does not apply to repayment of consumer foreign currencyloans.

2. Restrictions on advance payments for import of goods underforeign economic contracts:

• Advance payments under an import contract valued at more than US$50,000 (or equivalent) require a NBU permit (approval). The NBU must wait at least three days before granting such approval.
• NBU approval is not needed for payments pursuant to letters of credit issued by a first grade bank.
• Advance payments under an import contract valued at over US$500,000 (or equivalent) must be done only by a letter of credit.

Letters of credit in both instances should meet the requirementsset forth by the new regulation.

We will continue tomonitor and inform of changes affecting our clients.