After relentless criticism from banks and citizens, the National Bank of Ukraine has slightly relaxed confusing new rules on exchanging currency.
Since Sept. 23, banks have been required to check the identification documents of anyone making an exchange and store copies of them. Foreigners have not been able to change hryvnias into foreign currency without proof of an earlier exchange the other way.
The National Bank) has now softened the regulations, meaning that from Oct. 28, anyone will be able to sell up to Hr 150,000 ($18,750) by just showing a form of identification, without the bank making a copy.
However, this applies only to those who are selling foreign currency. People who want to buy currency are still required to leave copies of their documents. Foreigners will still, in addition, have to provide a document confirming that they have changed money from dollars to hryvnias before they can change it back again.
In a statement, the bank said it wanted to make life easier for foreigners visiting Ukraine during the Euro 2012 soccer tournament. The easing of rules will end on Sept. 1, 2012, when the tournament is completed.
Banks said the relaxation of rules – although minor – will help them and clients, as it will speed up the process of exchanging money.
“The NBU did a silly thing and is now trying to correct its mistakes. The new exchange rules caused nothing apart but inconveniences,” said an official from one retail bank, who declined to be named to avoid problems with the NBU.
The authorities argue that the new rules were needed to combat money laundering and the shadow economy.
But analysts say the government wants to stop people from selling hryvnias and weakening the national currency as concerns swirl of a new global slowdown.
The NBU spent $1.9 billion supporting the hryvnia in September as demand for foreign currency exceeded supply. International reserves fell to $35 billion, the lowest level since December last year.
On Oct. 24, the NBU announced it would issue commemorative gold “investment” coins as a way for citizens to preserve their savings, apparently a further step to try to reduce demand for foreign currency.
Oleksandr Dubykhvist, head of the NBU’s foreign currency reserves department, said that the volume of purchases of foreign currency by the population had halved since the beginning of the month, without giving figures.
“We have filtered out the purchases that don’t go toward the needs of the population,” he said.
But experts said more sustainable approaches would be needed in the long term to dampen demand.
“Administrative measures can make a short term impact on the market, however in the long term it is not a sustainable approach,” said Andriy Bespyatov, head of research at Dragon Capital investment bank.
