From 09:00 on July 21, 2022, the National Bank of Ukraine adjusted the official exchange rate of the hryvnia against the U.S. dollar by 25% - from UAH 29.2549/$1 to UAH 36.5686/$1, taking into account changes in the fundamental characteristics of the Ukrainian economy during the war and strengthening of the U.S. dollar against other currencies, according to a report on the NBU website.

"This step will improve competitiveness of Ukrainian producers, converge exchange rate conditions for different groups of businesses and households, and support the resilience of the economy during the war," the National Bank said.

The NBU said that the official exchange rate of the hryvnia against the U.S. dollar remains fixed.

"Under conditions of great uncertainty caused by the war, the fixed UAH/USD exchange rate is the main anchor for stabilizing expectations and the key tool for attaining the NBU’s priority goals. These goals are maintaining price and financial stability, which are a prerequisite for economic recovery," the regulator said, explaining its position.

The NBU estimates changing the exchange rate will raise inflows – and thus sales – of foreign currency revenues by exporters, minimize the speculative behavior of market participants, and allow stabilizing exchange rate expectations.

At the same time, no changes will be introduced in setting the bid and ask rates for foreign currencies in the cash and cashless segments of the market. As before, sale and purchase of foreign currencies by banks to fulfil clients' orders in the cashless segment of the FX market will be performed at a rate that may not deviate by more than 1% from the official rate. As before, the ask price in the cash segment of the FX market will be determined by the market supply and demand.

First, effective 21 July 2022, the NBU will allow the banks selling cashless currency to individuals for the purpose of depositing it for three calendar months or more, without the right for early termination, within the monthly limit of UAH 50,000 (in equivalent).

This will create an alternative to investing in cash currency, which will reduce demand for it and pressure on the exchange rate in the cash segment of the FX market.

In addition, the monthly limit on withdrawals abroad of cash FX from hryvnia cards has been replaced with a weekly one, in particular, an equivalent of up to UAH 12,500 per seven calendar days.

The monthly limit on card-based P2P transfers from Ukraine abroad using hryvnia cards issued by Ukrainian banks has been reduced to the equivalent of UAH 30,000 from UAH 100,000.

The monthly limit of UAH 100,000 (in equivalent) has been set for hryvnia card-based payments outside of Ukraine from all customer's hryvnia accounts opened with a bank.

Also, as of 25 July 2022, the NBU revokes a permit for commercial banks to purchase cash hryvnias from foreign financial institutions for cashless foreign currency.

According to the report, Third, the NBU has changed the algorithm for calculating the banks' open FX position limits regarding non-inclusion of the increase in provisions for FX assets of banks. The new requirement will come into force on 1 August 2022.

"This will prevent possible artificial overstatement of FX loan loss allowances by banks in order to increase the FX purchases," the NBU press service said.

The respective changes were made by NBU Board Resolution No. 154 dated July 21, which was published on the website of the Central Bank.