Hours after the measure was announced, Prime Minister Arseniy Yatsenyuk called for an emergency session of parliament to pass economic and financial measures designed to secure much-needed financing from the International Monetary Fund.
Capital controls introduced in recent weeks have failed to stem the plunge of the hryvnia, which has has lost about half its value against the U.S. dollar this year as a separatist conflict in the country’s east has drained finances, battered investor confidence and slashed output.
The National Bank on Wednesday introduced a three-day ban on foreign-exchange purchases by companies through banks and limited the banks’ purchases to 0.5% of their capital.
Ukrainian hryvnia’s value plummeting against the US dollar.
The move comes a day after the regulator’s introduction of import-related transactions and a ban on buying foreign currencies on borrowed money. The restrictions have so far failed to curb the decline of the hryvnia. After the measures were announced the exchange rate plunged 6.1% to 31.63 hryvnia to the greenback from 28.12, extending its year-to-date slide to 42%. People in Kiev say the black market rate is around 40 hryvnia to the dollar, compared with around 8 hryvnia in January 2014.
“The latest administrative controls will bring only brief respite to the forex market as long as forex demand remains driven by dwindling confidence and panic buying,” Kiev-based brokerage Dragon Capital said.
Mr. Yatsenyuk slammed the central bank for taking the decision “without any consultation,” saying that he’d found out about the measure from the Internet. “It clearly doesn’t add to the stability of the national currency that the National Bank is responsible for,” he said.
Blaming “speculators” for the hryvnia’s recent plunge, Mr. Yatsenyuk also urged parliament to meet urgently to approve economic and financial laws introduced by the cabinet.
Ukraine is waiting for the International Monetary Fund’s approval of a $17.5 billion emergency financing package, but parliament has so far failed to approve the budget cuts and economic overhauls needed.
Timothy Ash, an analyst at Standard Bank, said Mr. Yatsenyuk’s message is that the measures introduced by the central bank “are obviously not ideal, but they are a reflection of the difficult situation facing the country, and the best way to get them lifted is for parliament to meet early to pass the laws required to get IMF approval.”