National Bank of Ukraine toughens requirements for mandatory sale of foreign currency proceeds

The recent amendments to Ukrainian banking legislation stipulating additional requirements for the sale of proceeds by residents and non-residents in foreign currency have come into force.

Previous banking rules established a requirement for the mandatory sale of foreign currency proceeds in the amount of 50 per cent of the proceeds from the sale of goods under foreign trade contracts. Since 12 October 2013, the National Bank of Ukraine has obliged legal entities and individual entrepreneurs to sell 50 per cent of foreign currency proceeds from abroad at the foreign currency exchange market regardless of the source of such proceeds.

Today, not only funds received as proceeds from cross-border transactions, but foreign capital investments into Ukraine, foreign currency loan moneys may pose a risk to fall under the category of ‘foreign currency proceeds received from abroad’ from the standpoint of the National Bank of Ukraine. As a result, Ukrainian companies undertaking return of investments or repayment under loan agreements might be forced to convert Ukrainian hryvnyas, derived as a result of mandatory sale, into foreign currency, running into additional expenses caused by foreign exchange-rate risks…

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