Expert Opinion (#12 December 2014)

Cross-Border Transactions under Pressure from Currency

Gabriel P. Aslanian , Iryna V. Pokаnay

Driven by the increasing volatility of the hryvnia exchange rate and encouraged by the approval of major international creditors of Ukraine, the National Bank of Ukraine has been gradually toughening the regime of currency operations, a process started back in late 2013. This, predictively, affected those major Ukrainian companies whose business operations have a significant cross-border component. As usual, the regulator’s attention was focused on limiting the mechanisms of transferring foreign currency abroad.

Mandatory sale of foreign currency proceeds

The first step came with mandatory sale of foreign currency proceeds in October 2013. With certain exemptions (e.g., made for transactions involving international financial institutions, of which Ukraine is a member) this requirement applies to any foreign currency proceeds belonging to Ukrainian companies...

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