Issue No. 2 – September 2026
Analysis of the Current Situation in Ukraine’s Foreign Exchange Market
In the second half of September, the hryvnia was under constant downward pressure, but the NBU’s participation in trading kept the national currency from falling further. As a result, as of September 29, the official exchange rate stood at 44.81 UAH per dollar, whereas at the beginning of the month it was at 44.52 UAH per dollar.
Several key factors are currently influencing exchange rate fluctuations. The first is the security situation, which deteriorated significantly in September due to intensified Russian shelling of large enterprises, gas stations, warehouses, and civilian infrastructure. Because of this new large-scale destruction, the need to import goods and equipment into the country is growing, putting pressure on the exchange rate. The second is the international situation, which consists of two key factors: the war in Iran and high oil prices, as well as fluctuations in the euro/dollar exchange rate. Meanwhile, the volume of the NBU’s interventions in the foreign exchange market remains quite significant: according to published data, the National Bank sold more than $4.92 billion on the market over the 25 days of September.
Global Context
The global market saw the most significant event of recent months in September: on September 16, the Federal Reserve Committee decided to raise interest rates. Consequently, the benchmark interest rate was increased by 0.25 percentage points—to a range of 3.75–4%. The Committee explained its decision as an effort to bring inflation back to the 2% target more quickly. Fed Chair Kevin Worsh noted that inflation is “too high and has been so for too long.” According to him, the Committee needed to ensure that core inflation was moving toward the target “clearly and at a sufficient pace.” Among the main risks contributing to heightened uncertainty in the U.S., leading economic experts typically cite geopolitics, particularly the war in Iran and the associated volatility in energy prices. The Fed is expected to raise the benchmark rate once more by the end of 2026.
As tensions in the Middle East show no signs of abating, the oil market is under immense pressure from the so-called “Strait of Hormuz factor.” Yesterday, September 28, oil prices rose again. This time, the reason was a delay in ceasefire negotiations between the U.S. and Iran after U.S. President Donald Trump rejected the proposed peace agreement. As a result, oil prices rose: Brent futures climbed 1.27% to $105.64 per barrel.
There is slightly more certainty in the international foreign exchange market, where the dollar has been steadily strengthening throughout the second half of September following the Fed’s decision to raise interest rates. The EUR/USD pair has been trading at around 1.1366 USD/EUR in the final days of September.
Domestic Ukrainian Context
In September, the foreign exchange market remained under pressure from increased demand for foreign currency. The volume of interventions by the National Bank of Ukraine (NBU) remains very substantial: between August 31 and September 25, the NBU sold $4.924 billion on the market. As a reminder, in August, the volume of interventions totaled $4.82 billion. Businesses’ demand for foreign currency is rising, as intensified enemy shelling and destruction have led to a significant increase in business costs and a growing need to import equipment. In addition, the hryvnia is under pressure from fuel prices, which have risen sharply over the past month amid global trends in the oil and petroleum products markets.
Meanwhile, inflation in Ukraine continues to rise—in August 2026, consumer inflation accelerated to 8.1% year-over-year, prompting the Board of the National Bank of Ukraine to decide in September to raise the discount rate by 0.5 percentage — to 16% — in light of persistent fundamental price pressures. Regarding high prices, the NBU explained that last month’s price dynamics were driven by rising fuel costs amid the escalation of the war in the Middle East, as well as faster growth in certain administrative tariffs, which is largely a consequence of Russian attacks on critical infrastructure. The National Bank notes that raising the discount rate will help keep inflation expectations under control and return inflation to a steady downward trajectory toward the 5% target over the policy horizon.
However, the main issue is not inflation, but the state of the national budget. President Volodymyr Zelenskyy stated that the budget deficit for military needs amounts to $27 billion, and shortly after this statement, Prime Minister Serhiy Koretskyy announced a budget austerity regime. Given the significant funding shortfall, the government has deferred 39 billion hryvnias in capital expenditures, originally scheduled for September, to the end of 2026.
The Ministry of Finance expects to secure the necessary funds for the budget from the EU, G7 countries under the ERA mechanism, the IMF, the World Bank, the United Kingdom, and other partners. According to Finance Minister Serhiy Marchenko, Ukraine can avoid a budget crisis if it receives $29.5 billion in international financing by the end of 2026, as provided for under a number of support programs. However, for this to happen, the Verkhovna Rada and the government must fulfill the necessary obligations, including, in particular, signing the law on the taxation of digital platforms and adopting amendments regarding politically exposed persons.
Against the backdrop of a significant intensification of Russian shelling of civilian infrastructure and business facilities, Ukraine faces major threats of a substantial increase in government spending coupled with a simultaneous decline in tax revenues to the state budget. The economic slowdown means that international support will play an even more critical role. Meanwhile, the European Union has approved the eighth regular tranche for Ukraine under the Ukraine Facility program. As a result, the Ukrainian budget will receive nearly 3 billion euros in the near future. The funds are intended to support Ukraine’s macrofinancial stability, the country’s recovery and modernization, the functioning of public administration, and the implementation of reforms.
U.S. Dollar Exchange Rate: Trends and Analysis
Fluctuations in the dollar exchange rate in September were mixed: while the dollar weakened at the beginning of the month, it strengthened steadily in Ukraine during the second half of the month, following the trend on the international market. Consequently, from 44.52 UAH/USD at the beginning of September, the official exchange rate reached 44.81 UAH/USD as of September 29.
The cash market mirrored the interbank market’s movements, meaning the hryvnia weakened while the dollar strengthened. By the end of the month, the cash market appeared to have finally and firmly broken through the psychological barrier of 45 UAH per dollar. As of September 29, the buying rate was 44.50–44.75 UAH/USD, and the selling rate was 45.05–45.30 UAH/USD. The spreads between the buying and selling rates increased slightly to 0.6–0.8 UAH/USD.
Key influencing factors:
· High demand for foreign currency on the interbank foreign exchange market. Rising fuel prices, as well as the need to rebuild destroyed buildings, warehouses, gas stations, and other facilities, require foreign currency for import purchases, which increases demand for the dollar and the euro.
· The NBU is ready to inject foreign currency into the market to curb the hryvnia’s downward trend. Most currency sales take the form of interventions, which bring the exchange rate back below 44.90 UAH/USD. Only the regulator’s interventions determine the exchange rate range for the hryvnia.
· Demand for foreign currency in cash is growing in Ukraine. In anticipation of a difficult winter, the population is seeking to convert its savings into safe, liquid currencies to protect against inflation and devaluation.
· International factors: The war in Iran is still far from over, and the U.S. has already announced plans to intensify bombing in Iran after the midterm congressional elections in November.
· Oil prices are constantly influenced by the situation in the Middle East. Regular spikes in oil prices lead to a steady rise in the cost of petroleum products, which affects inflation rates in the U.S., the EU, and Ukraine.
· Market expectations: In the global market, expectations center on the next increase in the Fed’s benchmark interest rate. In Ukraine, the main focus is on the intensifying drone and missile attacks on major cities—particularly Dnipro, Odesa, Zaporizhzhia, and Kyiv—which are triggering new waves of migration and causing massive economic losses.
Forecast
· Short term (1–2 weeks): base range of 44.80–44.95 UAH/USD; fluctuations may be in different directions depending on the volume of the NBU’s foreign exchange interventions.
· Medium term (2–3 months): 44.95–45.40 UAH/USD. On the international market, the dollar is strengthening due to the Fed’s rate hike. In Ukraine, this factor also influences the dollar’s exchange rate movements; however, the main factor remains the volume of interventions the NBU is prepared to offer the market here and now, as well as the NBU’s plans to prevent the hryvnia from sharply depreciating.
· Long-term (6+ months): A depreciation trend will prevail, and by the end of winter—assuming the state budget deficit worsens and there are fairly prolonged delays in the receipt of new tranches of international aid—the exchange rate could reach 45.80–46.50 UAH/USD. Intensified attacks by the Russian Armed Forces on cities, infrastructure, and businesses are leading to a steady increase in pressure on the foreign exchange market. Exchange rate fluctuations will be most significantly influenced by the volume of international aid, the state of the energy sector, the scale of destruction caused by Russian attacks, and fluctuations in oil and petroleum product prices.
Euro Exchange Rate: Trends and Analysis
Throughout September, the euro exchange rate on the Ukrainian market declined. While the official rate was 51.64 UAH/EUR at the beginning of the month, it stood at 50.97 UAH/EUR as of September 29. The main reason for this trend is developments in the international market, where in the second half of September the dollar regained ground thanks to the Fed’s rate hike, while the euro, accordingly, lost ground.
In Ukraine’s cash market, the buying rate ranges from 50.40 to 51.90 UAH/euro, while the selling rate ranges from 51.35 to 51.60 UAH/euro. The spreads between the buying and selling rates began to narrow in September and reached 0.55–0.80 UAH/euro by the end of the month.
Key influencing factors:
· On the international market, the dollar is strengthening, while the euro is weakening. The Fed’s decision to raise the benchmark interest rate had the greatest impact on currency quotes. This provided significant support for the dollar.
· The ECB already implemented one rate hike in September, but another one cannot be ruled out.
Europe is experiencing a sharp rise in inflation, primarily due to rising fuel prices and uncertainty related to the conflict in the Middle East.
· In Ukraine, citizens are actively buying euros to build a financial cushion and save for travel to EU countries. For many citizens, the euro often takes priority over the dollar, as many have relatives living in the eurozone, and some view the EU as a place of refuge should the security situation deteriorate.
Forecast:
· Short term (2–4 weeks): On the Ukrainian market, the euro may trade within the range of 50.95–51.40 UAH/euro.
· Medium term (2–4 months): Depending on global events, the course of the war in Iran, and changes in energy prices, the euro may regain its lost ground; in that case, the official exchange rate in Ukraine could hover around 51.55–51.85 UAH/euro.
· Long term (6+ months): the euro exchange rate could reach 52.50–53.50 UAH/euro. The main factors influencing the euro exchange rate are inflation in the U.S. and EU countries, monetary policy decisions by the Fed and the ECB, further increases in the benchmark interest rate, the situation in the Middle East, and fluctuations in oil prices.
Recommendations for Businesses and Investors
In October, exchange rate fluctuations in the euro/dollar pair may intensify. This will require planning for potential flexibility in investment programs, as well as close attention to international news.
The dollar is regaining ground, while the euro is losing value. The dollar is currently being supported by the Fed’s benchmark rate hike, which has driven up the price of U.S. Treasury bonds. For investors, this means favorable investment opportunities in dollar-denominated assets.
The Fed may raise rates again in 2026. Although the main rate hike already took place in September, leading analysts believe the Fed may raise rates once more in December due to inflationary risks. This will provide support for the U.S. dollar.
The war in Iran is a source of global uncertainty. U.S. military operations in the Middle East continue, putting pressure on oil prices and adding uncertainty to financial markets. For investors, this means the need to always have several scenarios in mind and to plan for flexible options to exit certain assets in order to reallocate funds to others.
Investment security is the key factor when choosing a strategy. Recent exchange rate fluctuations in Ukraine’s foreign exchange market clearly indicate a depreciation trend. Therefore, it is advisable to use the hryvnia for short-term investments and current expenses, rather than for long-term investment plans.
Investment liquidity is a key focus. Due to global uncertainty and volatility in the oil market, fluctuations in the euro/dollar exchange rate do not follow predictable patterns; therefore, an investment portfolio should be structured with all factors in mind. It makes sense to keep the dollar and the euro as the main currencies in the portfolio, while the proportionate ratio of currencies depends on one’s plans and expected returns.
Investing in the dollar is a reliable source of profit. The U.S. economy continues to grow rapidly, as indicated by official statistics, and the U.S. dollar remains one of the most liquid currencies. The dollar’s share in a currency portfolio may well amount to 50–65%.
Diversify your currency portfolio with liquid currencies. The euro’s decline to 50.97 UAH/USD provides investors with opportunities to purchase the euro at a favorable rate for their portfolio in accordance with their individual strategy.
Holding different currencies in a portfolio helps safeguard investments. Investors should opt for liquid currencies whose exchange rates do not exhibit volatility. Among such currencies is the British pound sterling. The Bank of England is expected to raise interest rates twice over the next six months, as rising energy prices increase the risk of sustained inflation. This could open up new investment opportunities at more favorable rates.
Fluctuations in the dollar’s exchange rate on the international stage are always a reason for careful analysis and research into returns. The dollar exchange rate in October and November will be influenced by factors such as the course of the war in Iran, inflation trends in the U.S., the U.S. midterm congressional elections and their results, as well as signals from the Federal Reserve regarding its readiness for further tight monetary policy.
An increase in the NBU’s discount rate is not a reason to immediately switch to hryvnia deposits. Against the backdrop of rising inflation and intensifying devaluation fluctuations, hryvnia deposits should be used with great caution, and the largest share of capital should be allocated to stable foreign currency savings.
Key news to watch. It is important to monitor everything related to oil prices, potential new agreements between the U.S. and Iran, as well as U.S. labor market and inflation statistics. Pay close attention to news regarding the ECB’s plans to adjust its key interest rate. In Ukraine, the main factors influencing the foreign exchange market will be the state of international reserves, the volume of aid and loan tranches received from partners, the situation in the energy sector, and the destruction of infrastructure resulting from the aggressor’s attacks.
This material was prepared by analysts at KYT Group, an international multi-service FinTech product 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 guarantees of completeness, or obligations regarding timeliness, updates, or additions.
Users of this material must 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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