Business news from Ukraine

Issue No. 1 – July 2025

The purpose of this review is to provide an analysis of the current situation on the Ukrainian currency market and a forecast of the hryvnia exchange rate against key currencies based on the latest data. We analyze current conditions, market dynamics, key influencing factors, and likely scenarios.

Analysis of the current situation on the Ukrainian currency market: July opens a new stage for currency strategy

The beginning of the second half of 2025 brings a number of systemic signals that may affect the long-term currency strategy of both governments and private investors.

On a global level, the US dollar is losing its status as an absolute “safe haven currency”: according to Goldman Sachs, it is increasingly behaving like a risky asset, falling along with stock markets and bonds. This undermines its attractiveness in the eyes of investors and changes the logic of foreign exchange reserves: the dollar’s share of global foreign reserves is declining, while the euro, franc, and pound are growing. All these changes are not yet dramatic, but they are no longer random.

In Ukraine, the foreign exchange market is welcoming July with an increase in demand for cash and a shift in the focus of the population from the dollar to the euro. In June, Ukrainians bought $577 million worth of euros, exceeding dollar sales by only $44 million: the euro’s share of demand dominates the dollar, especially in the cash segment. Ukrainians are trying to catch the upward trend of the euro to increase their savings.

The Index of Devaluation Expectations of Ukrainians rose to 139.3 points, indicating a gradual return of nervousness at the household level. Unless there are strong, stable signals that the hryvnia’s support potential remains, Ukrainians’ sentiment may become a key source of pressure on the hryvnia, and household demand may become a driver of the devaluation trend. The combination of these factors may lead to restrictive measures on foreign exchange transactions by the banking regulator or foreign exchange market participants themselves.

At the same time, the fundamental stability of the hryvnia is maintained thanks to a strong resource of external support: in June, Ukraine received more than $4 billion in foreign exchange assistance, which allowed the NBU to increase its reserves to $45.1 billion, despite almost $3 billion in foreign exchange interventions. This allows the NBU to maintain control over the exchange rate without strict restrictions, while gradually testing options for currency liberalization.

The intersection of these factors is a new phase of currency positioning. The strategies that worked in 2022-2024 no longer guarantee stability. The dollar is no longer a “reinforced concrete base,” although it retains a key settlement role in international trade, including for Ukraine, and the euro is gaining weight even without fundamental advantages. However, the European Union, which faces the risk of trade duties being imposed by the US administration, may sooner or later use mechanisms to rebalance the euro against the dollar to offset the exchange rate factor of rising duties and maintain the price attractiveness and competitiveness of European exports. This demonstrates that the current trends are only signs of changes that could reverse in the opposite direction if significant circumstances change.

The foreign exchange market is increasingly becoming a field of scenario planning that requires flexibility, the ability to maneuver quickly, and the rejection of rigid exchange rate fixes.

Special attention should be paid to tracking the volume and dynamics of assistance from Ukraine’s international financial and security partners – the government has officially announced a shortfall of more than $40 billion in external financing in 2026. However, the apparent intensification of international efforts to provide military and economic support to Ukraine suggests that this gap will be largely compensated, thus guaranteeing macroeconomic and exchange rate stability. For this reason, we currently assess the risks of devaluation as moderate, and the long-term position of the hryvnia will depend less on the market and more on the architecture of fiscal policy and external support.

The domestic currency market will be in a state of rebalancing, taking into account domestic and global processes.

US dollar exchange rate: dynamics and analysis

In July, the US dollar exchange rate against the hryvnia continued to demonstrate stability, with a slight correction within a narrow range.

During the first few weeks of the month, the market remained in a stable corridor: the average purchase rate by banks was around UAH 41.55/$, and the sale rate was UAH 42.05-42.06/$, with situational drops to UAH 41.95/$. The official exchange rate fluctuated between 41.8 and 41.83 UAH/$. Its proximity to market indicators indicates that there is a consensus between the market and the regulator’s policy and that the balance of supply and demand is maintained.

Spreads between the bid and ask rates, as well as the approximately equal deviation of these values from the NBU’s official rate, remain stable. This indicates that there is no imbalance in the market or nervousness among market participants. The market does not generate additional risk premiums or precautionary measures, which indicates that the predictable situation remains and that there is no speculative pressure.

Key influencing factors:

• Stable interventionist policy of the NBU. The regulator continues to sell foreign currency moderately ($3 billion in June) amid rising reserves to $45.1 billion, which keeps the official and market exchange rates within controlled limits.
• Sufficient inflow of foreign currency into the country. More than $4 billion in aid from partners in June (Canada, the EU, and the World Bank) fully offset interventions and debt repayments, maintaining a stable sufficient reserve.
• Weakening of the dollar on the global market. In the second quarter, the dollar depreciated by more than 7%, which eased external pressure on the hryvnia and partially shifted the interest of Ukrainian players toward the euro.
• Behavioral shift among citizens. NBU data show a decline in interest in the dollar among the population: net purchases in June amounted to only $44 million against $276 million in euro equivalent.

Forecast:

• In the short term (2-4 weeks), the hryvnia will remain in the range of UAH 41.40-42.10/$ in the absence of external shocks or surges in demand from importers.
• In the medium term (2-4 months), the hryvnia is likely to gradually move up to 42.20-42.80 UAH/$ in the event of increased domestic budget spending, seasonal demand, or rising devaluation expectations of the population and economic agents.
• Longer term (6+ months): We see no prerequisites for a slowdown or decline in external aid, so the trend of a smooth controlled devaluation of the hryvnia to the level of UAH 43.00-44.50/$ looks most realistic in the absence of unforeseen factors. The NBU’s exchange rate policy and the government’s rhetoric on macroeconomic policy in 2026 may be a deterrent to devaluation.

Euro exchange rate: dynamics and analysis

In July, the euro exchange rate against the hryvnia demonstrated a high sensitivity to external conditions, in particular to the global weakening of the dollar. After a prolonged rise, the euro slightly corrected in the short term after the local peak: the buying rate dropped from 48.85 to 48.62 UAH/€, the selling rate from 49.55 to 49.22 UAH/€, and the official rate from 49.02 to 48.90 UAH/€. The correction was accompanied by a gradual narrowing of the bid-ask spread, which may indicate that expectations have stabilized after a wave of strong demand from the population.

Key influencing factors:

• Global dollar weakness: The euro strengthened amid a drop in the dollar index (DXY) of more than 10% since the beginning of the year and active reserve flows towards the euro and other reserve assets. According to the IMF, the euro’s share of official reserves rose to 20.1%, the highest since the end of 2022.
• Demand from the population: In June, Ukrainians significantly increased their purchases of cash euros, which supports the euro’s exchange rate in the domestic market.
• Uneven fluctuations: after rapid growth in June, the market partially recorded profits, which led to a slight correction in July. This is a classic phase of market adaptation after overbought.

Forecast:

• In the short term (2-4 weeks), the hryvnia is expected to fluctuate between 48.40 and 49.30 UAH/€, without breaking through the 49.50 level, provided there are no new external shocks.
• In the medium term (2-4 months), the hryvnia is likely to move to the levels of 49.50-50.20 UAH/€ in the event of further dollar depreciation or increased demand for the euro as an alternative reserve currency.
• Longer-term (6+ months): The baseline scenario envisages smooth movement in the range of UAH 50.00-51.50 with increased volatility, given the political uncertainty in the EU after the elections and the continuation of the global trend of de-dollarization.

In general, the euro market in Ukraine is showing clear signs of stabilization, as evidenced by lower volatility on short (1-2 weeks) and longer (3-4 weeks) time frames, as well as a noticeable narrowing of bid-ask spreads, which in the cash segment decreased from UAH 2-2.5 to 60-80 kopecks per euro in the quarter alone. Market operators have gotten used to the euro’s movements, and they do not take excessive insurance against its growth or decline. Finally, another sign of market stabilization and exchange rate consensus between operators and the regulator is the fact that market buying and selling rates for euros remain relatively stable and insignificantly different from the official NBU rate.

Recommendations for businesses and investors

The current situation in the FX market is a transition to a new positioning regime. The main conclusion is that flexibility and scenario planning should be the basis of the currency strategy in the second half of 2025.

Liquidity comes first

Maintain the ability to react quickly: assets should be either fully liquid or easily transferable between instruments. Time deposits, bonds without early redemption, and a single-currency strategy are dangerous traps in an unstable environment. The focus is not on yield, but on mobility.

The euro is a new favorite, but no longer overheated

The euro’s share of demand from households and businesses has grown significantly, but the market is gradually entering a stabilization phase. The best strategy is to gradually reassess the share of euros in your portfolio, especially if your operating model is tied to this currency. After a wave of strong demand, it’s time for consolidation.

The dollar retains the function of basic protection

Despite the global weakening, the dollar remains an important backstop in the event of unforeseen events and does not lose liquidity and importance as a global universal settlement instrument. Maintain its share in your portfolio, especially in case of autumn and winter devaluation scenarios or weakening of foreign aid. It may not show rapid growth, but it will not fall quickly and deeply when everything else is falling.

Spreads are an indicator of market expectations

Narrowing spreads are a signal of stabilization. Widening is a sign of nervousness. In the USD/UAH pair, spreads remain stable, while in the EUR/UAH pair, they fluctuate. This is a hint for action: do not rush into transactions when the spread is wide, and use the narrow spread as a moment to optimize.

Give up on fixed “benchmarks”

Fixed rates or “psychological marks” (such as 42 or 50 UAH) are a trap. For forecasting, focus on ranges rather than absolute numbers at the moment. Test your currency structure for various scenarios – from restrained devaluation to situational revaluation, and don’t forget to include scenarios of key currency movements in international markets in your model.

Hryvnia for operational needs only

Even a stable hryvnia is a currency with limited savings potential. Don’t keep more than you need for current expenses. The surplus should be converted into hard currencies or instruments pegged to them.

Currency liberalization is a marker, not a guideline

The current signals of easing currency restrictions are just a “ground test” by the NBU. Real changes are likely to come no sooner than the fall. Until then, you should remain cautious. Avoid taking steps based only on the “expected” easing of the rules – this is a trap. Consider instruments that are less dependent on the decisions of the regulator or banks (e.g., cash or euro- or dollar-based stablecoins).

Keep your focus on changes in the news

The macroeconomic and exchange rate indicators that the government and the NBU will include in the draft budget for 2026 should be the closest benchmark. This is a marker of exchange rate policy and expectations that will determine market behavior and forecast likely exchange rate trajectories.

This material has been prepared by the company’s analysts and reflects their expert, analytical professional judgment. The information presented in this review is for informational purposes only and cannot be considered 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, obligations of timeliness or updates or additions.

Users of this material should make their own risk assessments and informed decisions based on their own evaluation and analysis of the situation from various available sources that they consider to be sufficiently qualified. We recommend that you consult an independent financial advisor before making any investment decisions.

REFERENCE

KYT Group is an international multi-service product FinTech platform that has been successfully operating in the non-banking financial services market for 16 years. One of the company’s flagship activities is currency exchange. KYT Group is one of the largest operators in this segment of the financial market of Ukraine, is included in the list of the largest taxpayers, and is one of the industry leaders in terms of asset growth and equity.

More than 90 branches in 16 major cities of Ukraine are located in convenient locations for customers and have modern equipment for the convenience, security and confidentiality of each transaction.

The company’s activities comply with the regulatory requirements of the NBU. KYT Group adheres to EU standards, having a branch in Poland and planning cross-border expansion to European countries.