Net outflow from Ukraine in 2026 will remain at the 2025 level of 0.2 million people. This worsened migration forecast was included by the National Bank of Ukraine (NBU) in its updated macro forecast, which was also worsened due to expectations of a longer war.
“Given the slow normalization of economic conditions, estimates of migration flows in the coming years have been worsened. It is expected that in 2026, the outflow of migrants will continue at a similar pace to the current one (about 0.2 million people), while the April forecast predicted the return of 0.2 million people,” the National Bank’s inflation report published on its website says.
“Net returns will only begin in 2027 (about 0.1 million people, compared to 0.5 million in the previous forecast),” the NBU added.
At the same time, it left its assumptions for 2025 unchanged: a net outflow of about 0.2 million people is expected.
The NBU report notes that the risks of increased combat activity and shelling of rear regions, occupation of new territories, or a significantly longer war remain significant. If these risks materialize, migration outflows will intensify.
“The active policy of recipient countries’ governments to retain Ukrainians, especially those involved in the labor market, is also a negative risk for the migration forecast,” the National Bank adds.
According to the updated forecast, 5.8 million Ukrainians will remain abroad this year, 6 million next year, and 5.9 million in 2027.
At the same time, an alternative forecast, which assumes a faster end to the war, predicts that next year the number of Ukrainians abroad will fall to 5.6 million, and in 2027 to 5.1 million, which is in line with the April forecast.
As reported, the National Bank of Ukraine worsened its macroeconomic forecast in July: in 2025, economic growth will be 2.1% instead of the previously expected 3.1%, and in 2026-2027, it will be 2-3% instead of 3.7-3.9%.
In January-June 2025, PJSC Insurance Company Respect (Odessa) collected UAH 39.356 million in net premiums, which is 79.5% more than in the same period of 2024.
According to the company’s interim report published in the information disclosure system of the National Securities and Stock Market Commission (NSSMC), its gross premiums for this period amounted to UAH 39.689 million (+73.2%). UAH 333 thousand was transferred to reinsurance (2.9 times less).
In the first two quarters of this year, the company paid out UAH 5.584 million, which is 3.7 times more than in the same period last year.
At the same time, administrative expenses amounted to UAH 269,000, which is 2.3 times higher than in January-June 2024.
The financial result from operating activities of IC “Respect” for the period under review amounted to UAH 5.415 million (2.6 times less), net profit – UAH 7.025 million (2.5 times less).
According to the NSSMC, as of the first quarter of 2025, LLC “KUAA YUG-Invest” (Closed-end Undiversified Venture Investment Fund “Industrial”) owned 67.935% of the insurer’s shares, LLC “Ulublenoe Misto” owned 9.646%, and LLC “Bereg Stroy Service 2017” owned 9.242%.
IC “Respect” has been operating in the Ukrainian market since March 1995. The company’s main risk portfolio is related to the transport sector.
Issue No. 2 – 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 consider the current conditions, market dynamics, key influencing factors, and likely scenarios for future developments.
Analysis of the current situation on the Ukrainian currency market
The second half of July, and especially its last days, brought a number of important events and indicators that determine the exchange rate trajectory and currency expectations for the coming weeks and months.
At the same time, the dominance of external factors in shaping exchange rate dynamics in the Ukrainian market is becoming increasingly apparent. Internal factors continue to act as situational catalysts for short-term fluctuations, but do not influence broad long-term trends.
International context
Two key benchmarks for global markets — US GDP for Q2 and the Federal Reserve’s interest rate decision — were announced on the same day, shaping a new set of expectations.
The US economy grew by 3.0% y/y in the second quarter, significantly exceeding forecasts (2.3–2.4%) and recovering from a 0.5% decline in the previous quarter. Against this backdrop, markets reacted as expected: the dollar strengthened, government bond yields rose, and US stock indices firmed. This demonstrates that the dollar is regaining its function as a “currency of strength” rather than just a “safe haven currency” for a certain period of time, which has a direct impact on the markets of developing economies, including Ukraine.
At the same time, the Fed kept its key rate at 4.25–4.50% — unchanged for the fifth time in a row. However, the tone of the accompanying statement, as well as the split in the Committee (9–2), indicates a wait-and-see but no longer monolithic position on the part of the regulator. A wing has clearly formed within the Fed that is already inclined to ease policy. This has reinforced market expectations of a rate cut, with the probability of a September reduction estimated at 68%, creating the conditions for a possible global correction of the dollar in the coming months.
Against the backdrop of news from the US, the IMF updated its global forecast, confirming overall macroeconomic stability: global economic growth is expected to be 3.0% (+0.2 percentage points) in 2025 and 3.1% in 2026. At the same time, the forecast for the US has been raised to 1.9% (2025) and 2.0% (2026), and for the eurozone to 1.0% and 1.2%, respectively. The main drivers of optimism are a weak dollar, softer trade barriers, and the unexpected resilience of China, which remains one of the engines of the global economy. All this creates a positive environment for risk appetite, but at the same time changes the logic of positioning of major currencies.
At the same time, the euro came under short-term pressure after the conclusion of a new trade agreement between the EU and the US. The agreement on a permanent 15% tariff on most goods from the EU to the US, despite avoiding the worst-case scenario (a 30% tariff), was perceived by the markets as a deterioration in conditions for European exports. The euro lost 1% against the dollar, its biggest daily drop since May. This added volatility to the EUR/USD pair and indirectly affected cross rates on the Ukrainian currency market.
Long-term factors putting pressure on the euro and driving the dollar higher could be an agreement between the EU and the US on trade tariffs, with Europe committing to invest $600 billion in the US economy and the EU committing to purchase $750 billion worth of energy from the US. This means a potential outflow of liquidity from EU economies and the creation of long-term support for the US dollar as a result of stable long-term demand for it, provided that these agreements are implemented. However, the weakening of the euro against the dollar could drive growth in the eurozone economies by increasing the price competitiveness of its goods and services.
In such an environment, the level of international influence on the hryvnia exchange rate increases, and the logic of the domestic market increasingly depends not on the local economy, but on global expectations and signals from the central banks of partner countries.
Domestic Ukrainian context
At first glance, the domestic currency market looks calm: net demand for cash dollars has fallen to almost zero, and banks have imported as much cash as they have exported. At the same time, dollar imports have decreased by 17%, while the euro’s share of imports has increased (+2% in June).
This confirms that the shift in preferences of the population and businesses in favor of the euro is already a stable macro trend and also signals a strengthening of the behavioral factor in domestic exchange rate formation. The pressure of the behavioral factor or attempts by market operators to earn a windfall premium may become the most powerful and unpredictable drivers of the currency market.
At the same time, inflation risks remain significant. The NBU has worsened its inflation forecast for 2025 to 9.7% (previously 8.7%) and for 2026 to 6.6%. Among the reasons are the weakening of the hryvnia against the euro, which leads to higher prices for euro-denominated imports (fuel, energy, consumer and industrial goods), high business costs, and uncertainty about harvests and future exports. The long-term consequences of the war are a constant source of risk and uncertainty. Despite a temporary slowdown in consumer inflation to 14.3% in June, inflation expectations remain at 10%+, fueling fears among the population and businesses about the purchasing power of the hryvnia and supporting demand for foreign currency.
Another critical factor looms on the horizon: the external financing gap for 2026, previously estimated at $40–60 billion, has narrowed to $19 billion. This is a good sign of a potential easing of pressure on the Ukrainian currency market and the banking regulator’s reserves in the longer term, although the problem of resource shortages remains unresolved. The additional budgetary burden (already UAH 450 billion to the 2025 budget) and the concentration of 66% of spending on defense are creating a structural deficit, the coverage of which is a matter for negotiations with the IMF, the EU, and the G7, as well as further support from international partners.
Thus, Ukraine’s currency market enters August highly sensitive to global signals. The dollar has been supported by strong macro data and expectations of a soft shift in Fed policy. The euro is experiencing short-term volatility under pressure from geopolitical factors, but remains attractive to Ukrainian households and businesses as a tool for saving and parking free liquidity to protect against depreciation.
Ukrainian factors: inflation, behavioral shifts, operators’ appetite for a premium, and demand for cash — continue to have a situational impact. However, the main trajectory of the exchange rate will be determined not in Kyiv, but in Washington, Brussels, and New York.
Earlier, the KYT Group team of analysts published scenario models for the development of the situation on international currency markets on its blog: we are already seeing the realization of some of the signals and likely long-term scenarios predicted in our models — you can find them at this link for a broader understanding of the global context.
US dollar exchange rate: dynamics and analysis
In July, the dollar-hryvnia exchange rate continued to demonstrate high stability with insignificant intraday volatility that did not turn into trend movements.
For the second month in a row, the market has maintained a balance between supply and demand, with the USD/UAH currency pair trading in a narrow range: the buying rate offered by banks is 41.50–41.60 UAH/USD, and the selling rate is within the range of 41.85–41.95 UAH/USD. Market operators’ buying and selling quotes remain equidistant from the official exchange rate, which also remains relatively stable despite the sensational headlines in the media and plays an anchoring stabilizing role — there are insignificant fluctuations in the market.
The spread between buying and selling is maintained in the range of 40–50 kopecks, which is an indicator of the absence of pressure on the exchange rate and support for the exchange rate consensus reached between the regulator and market operators. Exchange rate fluctuations do not exceed 0.2%, which is exceptionally calm behavior for a period when such important macroeconomic signals are announced, indicating that developments are as expected and the most likely scenarios have already been factored into current exchange rates by market operators.
Key factors:
• Strong macro data from the US. A 3.0% jump in GDP and the Fed keeping rates steady signal that the dollar has room to grow and might get a short-term boost. But this potential hasn’t fully kicked in yet because the market is mostly waiting to see what happens next.
• Expectations of a rate cut in the US in September. Despite the strong report, markets see room for correction, which limits a sudden noticeable strengthening of the dollar.
• High level of NBU foreign exchange reserves (over $45 billion) and controlled interventions by the regulator allow for a calm market balance.
• Balance in the cash currency market and net demand for the dollar falling to almost zero — these factors remove internal pressure on the exchange rate and reflect the absence of psychological pressure on the market.
• No strong seasonal import load — importers are not showing increased activity, which also reduces the likelihood of short-term exchange rate jumps.
• Calm population. Most of the cash demand has shifted to the euro, leaving the USD/UAH in a state of technical calm.
Forecast:
Euro exchange rate: dynamics and analysis
In the second half of July, the euro entered a phase of steady correction on the domestic Ukrainian market. After a period of gradual decline since the beginning of the month, the last days of July were marked by a sharp acceleration in the decline in quotations. The most significant weekly decline in the euro exchange rate since April 2024 was recorded: the total decline since the beginning of the month was more than 1.5 UAH/EUR, of which about 1 UAH/EUR was in the last days of the month, when a clear downward acceleration was observed.
The buying rate fell from 48.85 to 47.55 UAH/EUR, and the selling rate fell from 49.55 to 48.30 UAH/EUR. The official exchange rate of the NBU was adjusted from 48.98 to 48.10 UAH/EUR. However, there was no significant deviation of currency market operators’ buying and selling rates for the euro from the official rate.
The spread between buying and selling narrowed from over 70–80 kopecks to 50–60 kopecks, although it showed some fluctuation in the last days of the month without forming a noticeable trend, which only indicates attempts by currency market operators to avoid losses due to volatility.
Overall, the exchange rate dynamics of recent weeks indicate that after a phase of active buying in June and early July, the market began to lock in profits, responding to changes in the external environment.
Key factors:
• New EU-US trade deal. A permanent 15% tariff on most goods from the EU to the US caused a sharp reversal of expectations: the euro lost 1% against the dollar in a day, which immediately affected the Ukrainian market.
• Global strengthening of the dollar. Strong US GDP and Fed rhetoric in favor of a cautious approach to rate cuts created the foundation for a revaluation of the euro.
• Behavioral correction phase. The market was saturated with cash euros: in June, banks brought €323 million into Ukraine (almost as much as in dollars), and after a wave of buying, solvent demand was exhausted. This prompted a correction after overbuying.
• Weakening import pressure. Some of the previously purchased euros are not converted into commodity imports immediately, which reduces demand in the market at the moment and will stabilize it in the future, as importers have built up liquidity reserves in euros and their future demand may be lower.
• The impact of public expectations. After intense demand growth in June, the mood of some citizens and market operators became more cautious, which affected the exchange rate dynamics.
Forecast:
Recommendations: flexibility is the only constant in times of turbulence.
For businesses:
For investors and savings:
For speculators:
This material has been prepared by the company’s analysts 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 responsibility for any consequences arising from the use of this information.
All information is provided “as is,” without any additional guarantees of completeness, timeliness, or updating or supplementation. Users of this material should independently assess the risks and make informed decisions based on their own assessment and analysis of the situation from various available sources that they themselves consider sufficiently qualified.
Before making any investment decisions, we recommend consulting with an independent financial advisor.
REFERENCE
KYT Group is an international multi-service FinTech platform that has been successfully operating in the non-bank financial services market for 16 years. One of the company’s flagship activities is currency exchange. KYТ Group is one of the largest operators in this segment of the Ukrainian financial market, is included in the list of the largest taxpayers, and is one of the industry leaders in terms of asset growth and equity capital.
More than 90 branches in 16 major cities of Ukraine are located in convenient locations for customers and are equipped with modern equipment for the convenience, security, and confidentiality of each transaction.
The company’s activities comply with the regulatory requirements of the National Bank of Ukraine. KYT Group adheres to EU standards of operation, with branches in Poland and plans for cross-border expansion into other European countries.
US President Donald Trump has signed an executive order raising tariffs on imports from Canada from 25% to 35% as part of efforts to combat the flow of illegal drugs across the northern border. The new tariffs will take effect on August 1, 2025, according to the White House’s official website.
According to the administration, the decision was made against the backdrop of “Canada’s persistent failure to arrest drug traffickers, seize illegal drugs, or coordinate with U.S. law enforcement agencies.”
“The president’s further actions are necessary and appropriate to protect the lives of Americans, as well as the national security and foreign policy of the United States of America,” the statement said.
The White House recalled that Trump declared a state of emergency under the International Emergency Economic Powers Act (IEEPA) in response to the crisis caused by fentanyl and other illegal drugs.
The preferential treatment for goods covered by the US-Mexico-Canada Agreement (USMCA) remains in place. At the same time, goods that are transshipped to avoid the new tariff will be subject to a separate 40% transshipment duty.
It is noted that in this fiscal year alone, more fentanyl has been seized at the northern border of the United States than in the previous three years combined.
The US has postponed sanctions against Serbian oil company NIS for the last time: a key company could be at risk
The United States has postponed for the fifth and final time the imposition of sanctions against Serbian oil company Naftna Industrija Srbije (NIS), which is controlled by Russia’s Gazprom. According to Reuters, the new exemption from the sanctions list has been extended until the end of August. No further extension is planned after that.
Serbian Energy Minister Dubravka Čedović Handanović said that Belgrade wants to keep oil supplies stable and called “the exclusion of NIS from OFAC sanctions a priority.” She said that dialogue between the US and Russia remains an important condition for this.
NIS is a strategically important company for the Serbian economy. It operates the country’s only oil refinery in Pančevo (near Belgrade), as well as the largest network of gas stations and logistics infrastructure in the fuel sector.
According to the ownership structure:
• 44.9% of NIS shares are owned by Gazprom Neft (Russia),
• 11.3% by Gazprom,
• 29.9% by the Serbian government,
• the rest by minority investors.
It was Russian control over the majority of shares that led to NIS being sanctioned by the US Treasury Department’s Office of Foreign Assets Control (OFAC). Initially, the company was to be completely blocked in January 2025, but since then it has received four temporary licenses to continue operations.
In July 2025, NIS applied for a temporary license for the fifth time and received it for one month, until the end of August. During this period, Gazprom Neft was again reminded of the requirement to withdraw from the Serbian company’s shareholders.
Analysts note that if the sanctions are imposed in full, this could destabilize the fuel market in Serbia, create logistical disruptions, and cause oil prices to rise.
An alternative could be a transfer of control from Russian shareholders to European or Middle Eastern investors, but negotiations on this issue have not yet been officially confirmed.
NIS is a leader in the Serbian petroleum products market and is actively developing its operations in Romania, Bulgaria, and Bosnia and Herzegovina.
The company is also involved in oil and gas exploration and production, lubricant manufacturing, and power generation.
Source: https://t.me/relocationrs/1228
On July 29, Oschadbank announced its intention to conclude a voluntary medical insurance agreement with VUSO (Kyiv).
According to the Prozorro electronic public procurement system, the bid of the sole tender participant, VUSO, amounted to UAH 134.285 million, compared to the expected cost of services under the tender terms of UAH 134.3 million.
As reported, the winner of a similar tender a year ago was also SK “VUSO” with a bid of UAH 114.2 million against the expected cost of UAH 114.8 million.
SK VUSO was founded in 2001. It is a member of the MTIBU and NASU, a participant in the agreement on direct settlement of losses, and a member of the Nuclear Insurance Pool.
