22 November 2012

Can the Ukraine Economy be 'De-dollarised'?

Important New Banking Rules in Ukraine
 
Individuals
Commencing 28th November 2012 – Individuals (Residents and Non-Residents)
will be allowed to receive a maximum equivalent of UAH 150,000 per month (approx. $18200) when transferred from another country into Ukraine. Any amount received over this limit will be automatically converted into UAH by their bank. This applies to all major currencies – EUR, GBP etc.  This is a National Bank of Ukraine ruling.
 
Companies
Since 19th November 2012 – 50% of ALL proceeds in foreign currency received in Ukraine
from export operations will automatically be sold and converted to UAH within ONE Banking day upon receipt by a Ukrainian Bank. The terms for settlement of cross border transactions has also been reduced from 180 days to 90 days.
This is not good for citizens or businesses in Ukraine.
It is clearly an attempt by the NBU and the Government to take control of the 'dollar economy' in Ukraine. For many many years people in Ukraine have made all arrangements in USD and recently in EURO. Citizens just do not feel comfortable dealing in their own currency the UAH.

Will people start dealing in UAH only? I very much doubt it.
The implications of these changes could be:
* Forcing even MORE money into the black economy (which is already one of the largest in   
   Europe).
* More 'offshore' deals taking place.

The UAH is expected to devalue further towards the end of 2012.
Foreign companies and most individuals will choose not to invest in Ukraine.
This is bad news.

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