Ukraine’s central bank said on Saturday it may require exporters to sell it 100 percent of hard currency earnings as the economy continued to reel from a political crisis.
Ukraine has been in turmoil since massive protests erupted over a November 21 election, forcing the central bank to spend foreign currency reserves to defend the hryvnia currency.
The bank is proposing to replenish those reserves by doubling the amount of hard currency exporters must sell to the bank to 100 percent of their earnings.
“We think, it is necessary to support the initiative of the central bank’s board to introduce 100 percent sales of hard currency revenues,” a statement by the Central Bank Council said.
The move would have to be approved by the bank and the central government.
Exporters, who account for about 60 percent of the country’s gross domestic product, have had to return 50 percent of hard currency earnings to the bank since a 1998 regional financial crisis.
Analysts said the central bank was considering the increase as officials expected a lower current account surplus next year due to deteriorating world market conditions for the country’s main exports — steel and chemicals.
In the two months before the presidential election, the central bank was forced to sell more than $2 billion from its reserves to meet a growing demand for hard currency due to capital flight and inflation fears among the population.
Inflation was fuelled by government pre-election spendings to increase wages and pensions.
The central bank’s gross hard currency reserves fell to $10.3 billion on November 26 from $12.4 billion in August.
The central bank has also introduced limits on dollar sales to companies and individuals. Cash dollar sales are limited to $1,000 a day and non-cash dollar sales to $50,000.
The central bank reiterated its stand that the country’s banking system was strong enough to survive political shocks.
“The Central Bank Council notes Ukraine’s banking system has enough reserves to withstand shocks related to a political crisis. The volume of nominated hryvnias is fully secured by the gold and hard currency reserves.”