Issue No. 1 – August 2026
Analysis of the Current Situation in Ukraine’s Foreign Exchange Market
In the first half of August, the dollar exchange rate in Ukraine was influenced by the National Bank of Ukraine’s flexible exchange rate strategy, which involves participating in trading on the interbank foreign exchange market through foreign currency interventions. As a result, the exchange rate—which had been attempting to break through the 44.83 UAH/USD mark—returned to the level seen at the beginning of the month—44.70 UAH/USD—by the end of the second week of August. The cost of this exchange rate stability was $2.11 billion, which the NBU sold to importers through foreign exchange interventions in the first half of August. This is nearly equivalent to the amount of foreign currency sold by the NBU during the last two weeks of July ($2.15 billion). Demand for foreign currency in August remains high, and the NBU is the market’s primary market maker. There is absolute stability in this regard. Thanks to the National Bank’s active participation in trading, the exchange rate remains virtually unchanged.
One of the main problems affecting the country’s economy and foreign exchange earnings is the difficult situation regarding the transport of Ukrainian goods by sea. In July and early August, Russia carried out more than 70 attacks on Ukraine’s port infrastructure and 62 strikes on ships. This effectively halted agricultural exports, which fell by 75% year-over-year in the first two weeks of August. In the long term, the halt in agricultural exports threatens to lead to a buildup of grain in warehouses, as well as multimillion losses for agricultural companies. However, this is unlikely to affect exchange rate fluctuations, as the National Bank continues to keep the situation fully under control.
Global Context
Global capital markets are awaiting the September meeting of the Federal Reserve Committee, where a decision to change the benchmark interest rate could be made on September 16. However, there is currently no certainty regarding this. Analysts even predict that the Fed may leave rates unchanged in September, as recently published data showed a decline in U.S. inflation for the second consecutive month. The U.S. Consumer Price Index rose 3.4% year-over-year in July, compared to 3.5% in June. This was reported by the Bureau of Labor Statistics. However, there remains some chance of a rate hike—some financial experts have already expressed the view that the central bank should raise rates by the end of 2026 to bring inflation, which exceeds the 2% target, under control.
Meanwhile, tensions are rising in the Middle East, and oil prices are highly volatile: on August 17, Brent crude reached $88.44 per barrel. As before, oil prices are being influenced by the situation in the Strait of Hormuz. Last week, Iran stated that it had no intention of lifting its blockade of the strait following remarks by U.S. President Donald Trump regarding the possibility of establishing control over this strategic waterway.
The EUR/USD pair has been trending toward a weaker dollar in August—as of August 17, the exchange rate stands at $1.1594 per euro, whereas the month began at $1.1485 per euro.
Domestic Ukrainian Context
The domestic foreign exchange market has seen high demand for foreign currency in August. While the NBU sold $4.1 billion through interventions over the four weeks of July, the volume of currency sold exceeded $2.11 billion in the first two weeks of August.
International reserves are currently at a high level, which is important for macrofinancial stability and, of course, for the NBU’s ability to meet demand for foreign currency. According to the regulator, international reserves stood at $51.2 billion at the beginning of August; in July, they decreased by 0.1%. The NBU explained that this trend is due to the National Bank’s foreign exchange interventions and the country’s debt payments in foreign currency: these transactions slightly exceeded inflows from international partners, the issuance of foreign currency bonds, and the conversion into hryvnia of funds received under the Ukraine Support Loan program. According to the NBU’s balance sheet data, in July the bank sold $4.76 billion on the foreign exchange market and purchased $1.8 million.
In August, the NBU announced a major package of easing measures for foreign exchange restrictions on individuals, which took effect on August 11. Among the key changes is an increase in the limit on non-cash foreign currency purchases by individuals from 50,000 UAH to 200,000 UAH per month. The daily limit on cash withdrawals by individuals from foreign currency accounts in Ukraine and abroad is also being raised from 100,000 UAH to 200,000 UAH. In addition, the NBU has expanded Ukrainians’ ability to pay for goods, work, and services abroad using hryvnia accounts. The National Bank expects that the new package of foreign exchange liberalizations will generate only moderate additional demand for foreign currency, which will be insignificant relative to the size of the foreign exchange market.
Meanwhile, Ukraine continues to receive international financial support, and at the end of July, it was announced that the EU would provide a tranche of 3.47 billion euros as part of the Ukraine Support Loan. These funds are intended to finance Ukraine’s defense needs, specifically for missiles, air defense systems, fighter jets, and drones. As for the IMF loan, the volume of disbursements and the frequency of tranches depend on compliance with the conditions of the EFF program. Two more reviews of the program’s implementation with the IMF are scheduled for 2026—in September and December. If all conditions are met on time, Ukraine will be able to secure over $2.4 billion from the Fund.
Among the pressing economic challenges facing the country as it confronts Russian aggression is exports. As a result of Russian strikes on port infrastructure, maritime shipments have nearly ground to a halt, and the Ministry of Agriculture reports that losses in the agricultural sector could reach $3 billion this year. Meanwhile, the government has already lowered the minimum export prices for certain types of agricultural products to prevent a halt in exports of grains and oilseeds. However, negative trends are not limited to the agricultural sector, as the enemy is targeting major logistics hubs, which is disrupting food supplies to supermarket chains; moreover, rerouting logistics routes could lead to increased costs for producers and retailers. All of this points to a possible rapid rise in food prices, particularly for dairy products, vegetables, and fruits. As a reminder, in July 2026, inflation accelerated to 7.7% year-over-year, while prices in Ukraine rose by 0.3% month-over-month.
U.S. Dollar Exchange Rate: Trends and Analysis
Devaluation expectations have not disappeared, but in August the exchange rate remains under the full control of the NBU; consequently, temporary stability is ensured by the regulator fulfilling importers’ orders on the interbank foreign exchange market. In early August, the official exchange rate stood at 44.64 UAH per dollar, and on August 17, the NBU’s exchange rate reached 44.70 UAH per dollar. On the interbank market in mid-August, trading took place at a rate of 44.70–44.78 UAH/USD. In the cash market, the exchange rate changed only slightly: in mid-August, at banks and currency exchange offices, the buying rate ranged from 44.30 to 44.55 UAH/USD, and the selling rate ranged from 44.90 to 45.10 UAH/USD. Spreads narrowed in August to 0.4–0.6 UAH/USD.
Key influencing factors:
• Rising demand for foreign currency is offset by an increase in the volume of foreign exchange interventions by the NBU. The National Bank acts as the main seller of foreign currency and, through its supply of foreign currency, prevents the hryvnia from further devaluation.
• International factors: The protracted conflict in the Middle East is leading to erratic fluctuations in the oil market and rising prices for petroleum products. U.S. President Donald Trump stated that he intends to declare the Strait of Hormuz U.S. territory.
Tehran has emphasized that the strait will be closed or opened solely at Iran’s discretion.
• The hryvnia has strengthened on Ukraine’s cash foreign exchange market. In mid-July, the selling rate for the dollar at bank teller windows and currency exchange offices remains within the range of 44.90–45.10 UAH/USD.
• Market expectations: The main focus is on the Federal Reserve’s September meeting, when a decision to raise the benchmark interest rate is possible. However, recent inflation reports indicate a slowdown in the pace of price growth, which could well influence the Committee’s decision to leave the rate unchanged. In Ukraine, the authorities are focused on ensuring the country’s defense and thoroughly preparing for winter. The government’s main priority is protecting critical infrastructure and building up reserve stocks of fuel and equipment needed for the rapid restoration of damaged facilities.
Forecast
• Short term (1–2 weeks): base range of 44.80–45.10 UAH/USD; the NBU will attempt to keep the exchange rate within the range of 44.70–44.85 UAH/USD through interventions.
• Medium term (2–3 months): 44.95–45.30 UAH/$. The Federal Reserve’s September decision on the federal funds rate and clear signals of an impending peace in the Middle East may, in the long run, contribute to the strengthening of the dollar on the international stage. In Ukraine, the dollar will also strengthen.
• Long term (6+ months): In the baseline scenario, the depreciation trend remains the main factor, and the exchange rate could range between 45.40–46.20 UAH/USD by the end of the year. Key factors influencing the exchange rate will continue to include the volume of international reserves, new multimillion-dollar inflows of financial aid from partners, and the fulfillment of the state budget revenue plan; the situation in the energy sector and the level of protection of critical infrastructure facilities against destruction resulting from massive attacks by the Russian Armed Forces will also play a role.
Euro Exchange Rate: Trends and Analysis
Throughout July, the euro strengthened on the domestic market against the backdrop of the international market, where the dollar was weakening while the euro was gaining ground. The official euro exchange rate in Ukraine stood at 51.27 UAH/euro in early August and reached 51.71 UAH/euro by August 17. On Ukraine’s cash market, the euro has been strengthening throughout August. On August 17, the buying rate ranged from 51.05 to 51.65 UAH/euro, while the selling rate ranged from 51.85 to 52.15 UAH/euro. The spreads between the buying and selling rates for the euro widened in August and ranged from 0.45 UAH/euro to 1 UAH/euro.
Key influencing factors:
• On the international market, the euro is strengthening against the backdrop of a weaker dollar. Currency quotes are influenced by factors such as expectations of a Fed rate hike in September and rising tensions in the Middle East.
• The ECB may raise rates in September. The basis for such a decision will be rising prices in the EU: inflation in the eurozone rose to 2.9% in July.
• After a prolonged period of stability, the euro exchange rate in Ukraine began to rise sharply in August. There is no frenzied demand for the euro, and banks and currency exchange offices have sufficient cash reserves to meet demand.
Forecast:
• Short term (2–4 weeks): On the Ukrainian market, the euro may remain within the range of 51.80–52.45 UAH/€.
• Medium term (2–4 months): if the euro continues to strengthen on the international market, the exchange rate in Ukraine will reach the range of 52.20–52.90 UAH/€.
• Long term (6+ months): By the end of the year, the euro exchange rate may be within the range of 52.50–53.60 UAH/€. The main factors influencing the euro exchange rate remain unchanged: the U.S. Federal Reserve’s decision on the benchmark interest rate, the ECB’s decision on interest rate changes, the inflation rate in the EU, oil prices, and developments in the conflict in the Middle East.
Recommendations for Businesses and Investors
The dollar is losing ground against the euro on the international market. The downward trend in the U.S. currency is driven by investors’ expectations of a benchmark rate hike in September, as well as the escalation of the conflict between the U.S. and Iran. A further decline in the dollar’s exchange rate could help slow the hryvnia’s depreciation.
The Fed may adjust key interest rates. A rate hike as early as September could support the dollar in the global market, as the value of Treasury bonds will rise, which is likely to increase demand for U.S. securities, boosting the dollar.
Focus on liquid currencies. Global geopolitics is causing currency rates to fluctuate, but the dollar and the euro remain the base currencies for investors when formulating an effective currency strategy.
A war in Iran can no longer shake the dollar’s position. The acute phase of the conflict in the Middle East is not a reason to abandon investments in dollars.
Buying dollars is a timely and profitable strategy. While the domestic market is experiencing temporary, fragile stability, it makes sense to invest in the U.S. currency as part of both medium- and long-term currency strategies.
Currency savings aren’t limited to cash.
The National Bank of Ukraine’s (NBU) increase, effective August 11, of the permitted limit for purchasing non-cash foreign currency to 200,000 UAH allows investors to increase their holdings in foreign currency accounts at banks. However, cash savings will remain the key component.
Investments in precious metals and stocks are possible, but they will not be the main focus of a foreign exchange strategy. As of August 11, the NBU has allowed the unimpeded transfer of 200,000 UAH from a bank account to non-cash bank metals and securities issued by foreign entities. However, such investments should constitute only a small portion of savings—within 15%—while the dollar and the euro should remain the core components of a foreign exchange strategy.
Safe investments—a guarantee of capital preservation. In various financial scenarios, it is important to identify stable sources of income and ensure the reliability of your asset allocations.
The euro is an important part of an investment portfolio. The euro’s appreciation to 51.70 UAH/EUR opens up new opportunities for investors: either to make a quick profit by selling a portion of their euro-denominated savings, or to purchase additional euros to expand their portfolio in this currency.
Keep an eye on decisions by the U.S. and EU central banks, as well as on inflation and labor market statistics in the U.S. and EU. Since both the Fed and the ECB are preparing to consider rate hikes in September, key statistical data on inflation and employment levels in August will serve as the basis for regulators when making major decisions.
Diversification is the key to investment security. Investors should build currency portfolios across various currencies, and while the liquid U.S. dollar and euro remain the core holdings, it is advisable to periodically allocate a portion of funds to other reliable European currencies, including the British pound and the Swiss franc. It is also advisable to monitor Poland’s economic forecasts to consider potentially converting 5% of your savings into Polish zlotys.
Deposits in hryvnia—only for savings intended for purchasing foreign currency. It is advisable to choose hryvnia deposits with a term of 3–6 months and a mandatory rollover option. The interest rate on the deposit is not critical in this case, since the savings will eventually be converted into foreign currency.
What’s important in the news. Investors should monitor news from the White House regarding the prospects for the U.S.-Iran conflict. Information on U.S. Treasury bond yields will also be important. Major currency news will emerge in September—following the meetings of the Federal Reserve and ECB committees, it will become clear whether key interest rates are rising in Europe and the U.S. In Ukraine, the main indicators of the situation on the foreign exchange market will be the receipt of financial aid from partners, the level of international reserves, the situation with grain exports, developments on the front lines, information on the state of the energy sector and preparations for winter, as well as the volume of natural gas injected by Naftogaz into underground gas storage facilities.
This material was prepared by analysts at KYT Group, an international multi-service product-based FinTech platform, and reflects their expert, analytical, and professional judgment. The information presented in this review is for informational purposes only and should not be construed as a recommendation for action.
The company and its analysts make no representations and assume no liability for any consequences arising from the use of this information. All information is provided “as is,” without any additional warranties of completeness, obligations regarding timeliness, or updates or additions.
Users of this material should independently assess risks and make informed decisions based on their own evaluation and analysis of the situation using various available sources that they themselves deem sufficiently reliable. We recommend consulting with an independent financial advisor before making any investment decisions.
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