Bankers expect restrictions on currency transactions to be lifted: when will it happen

Restrictions on foreign exchange operations play a stabilizing role for the market, but they may be gradually lifted in the future if the security and economic situation stabilizes and the inflow of foreign currency from exports and investments increases. This is what the interviewed financiers told the Obozrevatel.

"The existence of restrictions helps to curb speculation, reduce pressure on the foreign exchange market and the volatility of the national currency. The population's excitement is the most unregulated and uncontrollable risk for currency and exchange rate stability," analysts at KIT Group, one of the largest operators of the Ukrainian currency exchange market, explained the stabilizing role of restrictions on the currency market.

Representatives of the banking sector confirmed that there is now an increased demand for foreign currency from households, which puts some pressure on the stability of the national currency.

"Over the last 4 months of last year, net purchases of foreign currency by the population have consistently exceeded $1 billion per month. In general, in 2024, Ukrainians bought $12.2 billion more than they sold," Obozrevatel notes in its review. It also notes that the purpose of restrictions on foreign exchange transactions for individuals and businesses is not to ban them. This is only part of the NBU's toolkit to ensure exchange rate stability and a controlled exchange rate in the interbank and cash markets.

However, even large volumes of foreign currency purchases by households should not be alarming: by building up "private foreign exchange reserves," Ukrainians do not use these funds to buy goods and services, which is an additional factor in curbing inflation. Therefore, while devaluation expectations dominate among Ukrainians, experts advise against waiting for currency liberalization, as it can only harm currency and economic stability.

Instead, the end of the war, controlled inflation, economic growth, and exports could signal currency liberalization.

However, experts warn that instead of restrictions on foreign exchange transactions that may be lifted, Ukrainians should prepare for closer monitoring by banks and the state.

In the long term, despite some steps towards the expected liberalization, we can predict with high probability that transaction monitoring and verification of entities will continue to be required for large or regular FX transactions. This new regulatory reality will be part of Ukraine's implementation of strict global standards and European policies on our country's path to the European Union