The National Bank of Ukraine’s Currency Liberalization Strategy
The National Bank of Ukraine (NBU) introduced measures to ensure the stability of the financial system at the beginning of the full-scale war, including fixing the exchange rate of the hryvnia and administrative restrictions. These steps were necessary to prevent panic and adapt to the new conditions of war. However, the fixed exchange rate regime eventually showed its limitations.
To provide greater flexibility in the foreign exchange market and ease restrictions, the NBU approved the Strategy of Currency Liberalization on June 29, 2023. This document sets out the course of action for gradually lifting restrictions and returning to inflation targeting. The main stages of the Strategy include:
- — The first stage involves minimizing the diversity of exchange rates, liberalizing trade operations, and supporting new loans and investments.
- — The second stage involves liberalizing trade finance, managing currency risks, and simplifying repatriation of funds.
- — The third stage involves liberalizing operations for the population and derivatives, as well as promoting lending to non-residents and investments abroad.
Starting from October 3, 2023, the NBU transitioned to a managed floating exchange rate regime, allowing the official rate to be set based on market conditions.
These steps are aimed at creating favorable conditions for business development and ensuring the stability of the financial system in the face of global challenges.
