Ukraine's central bank softened its foreign currency regulations on Thursday by removing a requirement that three-quarters of all money coming into the country as foreign investment be converted into the local hryvnia currency. The decision takes effect on May 11. The "outlined steps of the liberalization of currency regulation will help increase the inflow of foreign investment in Ukraine," the bank said in a statement.
The central bank imposed several restrictions and requirements on the domestic interbank foreign exchange market two years ago to curb foreign currency outflows and support the hryvnia that had lost about half its value against the dollar. The regulator tightened the administrative screws imposing limits on foreign currency purchases, withdrawals by individuals and deposit-holders, and obliging banks to convert 75 percent of foreign currency being deposited locally into hryvnia.
It also prohibited foreign investors from taking profits out of the country, early repayment of loans to foreign lenders, and lending in local currency to buy foreign currency. The central bank has agreed a road map with the International Monetary Fund to remove such restrictions gradually following the hryvnia's stabilization and the resumption of IMF aid to crisis-hit Ukraine, a top central bank official told Reuters last year. Foreign currency supply exceeded demand in April, helping the hryvnia strengthen almost 4 percent to 25.1230 per $1 after it had lost nine percent in the first quarter.
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