NBU sharply increases official dollar exchange rate by 25%

21 July, 03:29 PM
NBU increased the official dollar rate by 25% (Photo:National Bank of Ukraine / Flickr)

NBU increased the official dollar rate by 25% (Photo:National Bank of Ukraine / Flickr)

The National Bank of Ukraine (NBU) on July 21 changed the official exchange rate of the hryvnia against U.S. dollar by 25%, to UAH/USD 36.5686.

The regulator said that the shift in the fundamental parameters of the Ukrainian economy during the war and the strengthening of the dollar had become the reason behind the decision.

"Fixing the hryvnia exchange rate at UAH/USD 29.25 at the onset of the war helped ensure stable functioning of the financial system," the report says.

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"The war has lasted for almost five months, which brought significant changes to the Ukrainian and global economies. Therefore, the official exchange rate of the hryvnia fixed as of Feb. 24 lost its relevance and has gradually stopped being the expectations anchor."

According to the NBU, keeping the exchange rate fixed will enable the NBU to maintain control over inflation dynamics and support uninterrupted functioning of the financial system. 

"This is the key condition for the stable operation of the economy, which is vital during the war," emphasized NBU Governor Kyrylo Shevchenko.

It is stressed that the adjustment of the official hryvnia exchange rate will have only a limited impact on the acceleration of price growth. Instead, fixing the official rate at a new, more stable level will allow the NBU to keep price developments in Ukraine under control.

Meanwhile, no changes will be introduced in setting the bid and ask rates for foreign currencies in the cash and cashless segments of the market:

  • as before, sale and purchase of foreign currencies by banks to fulfill clients' orders in the cashless segment of the forex market will be performed at a rate that may not deviate by more than 1% from the official rate;

  • as before, the ask price in the cash segment of the forex market will be determined by the market supply and demand.

To balance supply and demand in the forex market, the NBU is also taking some additional measures.

In particular, on July 21, 2022 the NBU will allow the banks selling cashless currency to individuals for the purpose of depositing it for three calendar months or more, without the right for early termination, within the monthly limit of UAH 50,000 (in equivalent).

Also, the monthly limit on card-based P2P transfers from Ukraine abroad using hryvnia cards issued by Ukrainian banks has been reduced to the equivalent of UAH 30,000 from UAH 100,000.

The monthly limit of UAH 100,000 (in equivalent) has been set for hryvnia card-based payments outside of Ukraine from all customer's hryvnia accounts opened with a bank. Most Ukrainians staying abroad will not be affected by this restriction.

Moreover, as of July 25, 2022, the NBU revokes a permit for commercial banks to purchase cash hryvnias from foreign financial institutions for cashless foreign currency.

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