A new shipment of hard cash may alleviate Ukraine’s shortage of dollars. The money has already been injected into the banking system, the National Bank of Ukraine (NBU) said in a statement.
On March 25, the NBU exchanged $130 million of these dollars for non-cash dollar assets at 11 out of 14 banks that have systemically important status in the country. According to the Independent Association of the Banks of Ukraine, smaller banks were then able to get the needed cash from their larger counterparts.
A second shipment of cash is expected shortly, the NBU stated. The central bank will continue to hold cash exchange transactions to satisfy their clients’ demand for dollar and euro withdrawals.
“However, we also recommend that citizens restrict cash transactions and, where necessary, carry out all transactions online and with payment cards. It’s more modern and safer,” the NBU said in a statement.
Due largely to the ongoing COVID-19 crisis, Ukrainian citizens’ and businesses’ demand for cash dollars jumped sharply, at a time when flights were restricted to Ukraine, choking off the supply of the currency.
“The inability to provide cash is painful for the bank,” said Olena Korobkova, head of the bank association earlier in the week. “The faster the client gets what he wants, the faster he will be ready to return to the bank.”
She clarified that buying non-cash dollars has not been a problem and banks were able to return foreign currency deposits without delay.
“But for some people, it is psychologically very important to get cash dollars in their hands,” she added.
Ruslan Chorniy, head of the banking market research firm Financial Club, pointed out that a cash dollar shortage has been seen around the world, not just in Ukraine. However, the U.S.’s Federal Reserve’s $1.5 trillion intervention should alleviate this demand.
