Business news from Ukraine

Issue No. 1 – October 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 currency market

International context

The first half of October was significantly influenced by the US Federal Reserve’s decision to cut its key policy rate last month. On September 17, the US Federal Reserve cut its interest rate by 25 basis points to the range of 4-4.25%. The Fed aims to maximize employment and inflation at 2% in the long run. But uncertainty about the US economic outlook remains high.

Even before Fed Chairman Jerome Powell’s announcement of a new range for the key policy rate, the EUR/USD pair hit a new one-year high of 1.1878, driven by expectations that the Fed would begin its easing cycle on September 17. However, shortly thereafter, fluctuations in the EUR/USD pair showed a reverse trend: in October, the dollar began to strengthen steadily against the euro, which was influenced by several important factors.

First and foremost, trade tensions between the US and China have eased significantly. On October 10, President Donald Trump announced that he would impose 100 percent tariffs on Chinese goods starting November 1. But on October 13, Trump said he would be able to resolve the conflict with Beijing and “everything will be fine.”

Secondly, the strengthening of the dollar is influenced by the situation in the EU, where the ECB does not intend to change its key policy rate yet, as it believes that current interest rate levels are stable enough to “cope with shocks.” Although investors are expecting a rate cut, last month the ECB kept its key policy rate unchanged at 2% (inflation in the EU is also around 2%).

Among the “shocks” in the EU is the unstable trade policy of Donald Trump. While the Fed, claiming uncertainty, cuts the rate, the ECB adheres to a conservative policy of key policy rate stability. However, the ECB may decide to cut the rate if the effects of the US tariffs on EU goods turn out to be more significant than expected. Another reason for a cut could be the unstable situation in France.

Oil prices remained somewhat stable in October, responding to the context of US-China relations. While the escalation of tensions between the two countries stimulated the decline, after news of the upcoming meeting between Donald Trump and Xi Jinping on October 13, Brent crude oil futures rose 0.9% to $63.32 per barrel, and WTI futures closed up 1% to $59.49 per barrel.

The coming weeks will be determined by market expectations regarding the Fed’s decision, as it is likely that on October 28-29, during a meeting of the Fed Committee, a decision will be made on the second rate cut – by another 0.25 bp. However, this will be influenced by the situation with inflation and unemployment in the United States.

The ECB will consider possible rate changes at its meeting on October 30, but so far, a rate cut does not seem realistic. The soonest it could happen is if new statistics show the deflationary processes that the EU fears. The eurozone’s “black swans” include fiscal tightening in Germany, the destructive impact of US trade policy, price fluctuations in the oil and gas markets, and the government crisis in France.

In Ukraine, the dollar is expected to follow a clear trajectory in line with global quotes, where the EUR/USD exchange rate showed a strengthening of the dollar from 1.1724 to 1.1555 in the first two weeks of October. The euro/dollar pair is currently experiencing a lull, but with the prospect of a weaker dollar in the event of further cuts in the Fed’s key policy rate. However, the easing of Trump’s tariff stance on China is affecting sentiment: fears of escalating trade tensions are declining, which is supporting the dollar. However, markets have already taken into account a possible 25 basis point cut in October and another possible cut in December 2025, which limits the dollar’s short-term growth.

Domestic Ukrainian context

Ukraine’s FX market continues to be influenced by the National Bank of Ukraine’s controlled flexibility strategy. Reserves are growing: as of October 1, 2025, Ukraine’s international reserves amounted to $46.518 billion, which is 1.1% more (+$484 million) than a month ago.

Since the beginning of October, the hryvnia has been gradually weakening against the dollar: as of October 14, the official exchange rate reached 41.61 UAH/USD, having lost 1.14% in two weeks. The exchange rate in the cash market is following a similar rhythm, with the weighted average rate as of October 14 at UAH 41.64/USD.

In October, the interbank market saw an increase in demand, and the NBU was forced to increase its interventions. This trend is, on the one hand, seasonal, as companies’ need for foreign currency to make payments increases in the fall. On the other hand, the increased shelling of Ukraine’s energy infrastructure was an additional factor influencing the hryvnia, which logically led to an increase in imports of energy equipment.

Another trend in the fall is the growing demand for cash from the population. In September, Ukrainians bought $1.89 billion worth of cash foreign currency and sold $1.5 billion, bringing the net purchase of foreign currency by households to $382.7 million. This trend is likely to continue in October.

The war with large-scale shelling of infrastructure will remain the main factor influencing exchange rate fluctuations in Ukraine. The psychological pressure of anticipating the approach of cold weather and possible blackouts and heat outages will also play a role. The National Bank of Ukraine has the ability to smooth out fluctuations with interventions, in particular thanks to large-scale international assistance: in January-September, Ukraine received $30.6 billion, and in October, €4 billion in macro-financial assistance from the EU under the ERA Loans mechanism. The regular inflow of international aid and the NBU’s interventions remain the main factors in countering the growing pressure on the hryvnia this fall.

US dollar exchange rate: dynamics and analysis

General characteristics of market behavior

October is a mildly fluctuating month for the dollar: the US currency is strengthening both on the international and Ukrainian markets.

Over the past 14 days, the exchange rate has been gradually rising: the average buying rate has increased from UAH 41.01 to UAH 41.4, the selling rate from UAH 41.52 to UAH 41.84, and the official NBU rate from UAH 41.14 to UAH 41.61. The dollar is strengthening without any sudden movements.

In the first half of October, the buying rate was in a narrow corridor of 41.0-41.27 UAH/$ on the cash market (weighted average rate), and the selling rate was in the range of 41.4-41.65 UAH/$. At bank cash desks, the spread between the buy and sell rates increased slightly during the first two weeks of October, and in large retail banks it was UAH 0.4-0.5 per dollar.

Key factors of influence

1. International context. Global markets have already experienced pressure from the expected Fed rate cut, and the FOMC’s rate decision in September stabilized markets. The US-China trade war is setting most of the negative trends for the dollar. The gradual easing of tensions between the two countries provides some room for further dollar appreciation.
2. International aid and reserves. As of October 1, 2025, Ukraine’s international reserves amounted to $46,518.6 million. In September, the NBU received over $2.9 billion in foreign currency accounts. Ukraine continues to receive assistance from its partners, and on October 1, it received €4 billion in proceeds from frozen Russian assets. The NBU has sufficient reserves to adjust the market flexibly, and the temporary increase in demand for foreign currency is not critical.

Forecast.

• Short-term (1-2 weeks): base range of UAH 41.4-41.9/$ with a possible inclination to the upper end of the forecast.
• Medium-term (2-3 months): 41.30-42.00 UAH/$. If the Fed decides to cut the rate in October and the risks of a trade war between the US and China diminish, the fundamental movement of the dollar on the international market may strengthen, which will also affect the exchange rate in Ukraine. However, the domestic context of expectations of continued large-scale shelling of infrastructure and deterioration in the energy sector, as well as the high need for increased imports, may play into a faster strengthening of the dollar in the Ukrainian currency market.
• Longer term (6+ months): The scenario of gradual hryvnia devaluation remains in place. Provided that international aid continues to flow in regularly, the benchmark is UAH 43.20-44.40/$ by mid-2026, taking into account the current context of the situation in Ukraine.

Euro exchange rate: dynamics and analysis

General characteristics of market behavior

The euro on the Ukrainian market in the first half of October showed a downward trend, which is in line with the trend on the international market. On a monthly retrospective horizon, quotes fell by an average of UAH 0.50-0.60 per euro. While on October 1, the official euro exchange rate was at 48.3 UAH/€, on October 14 it was 48.13 UAH/€.

Key observations

Ø Geometry of the rates:

o The selling rate went up in spurts in the first days of October, but the main downward trend became noticeable after October 6.

o The buying rate continues to move away from the selling rate, with the spread between the rates in banks ranging from UAH 0.65-0.95 per hryvnia to EUR 0.95 per hryvnia.

Ø Supply and demand:

o Demand for cash euros in Ukraine slightly declined for the second month in a row, with euro purchases declining, but the euro is still among the main competitors of the cash dollar.

o The high average between buying and selling euros indicates both a decrease in demand and a desire of financial institutions to hedge against sharp fluctuations inherent in the euro.

Key influencing factors

• Global context: expectations for the October Fed meeting in the near term create conditions for the euro to strengthen, which creates a risk of deflation for the eurozone, and with it the need for the ECB to cut its rate.
• Domestic market: demand for cash euros is declining, as are speculative transactions, but the bid-ask spread remains high.
• Behavioral factor: people are more likely to use the euro to solve urgent issues (non-cash replenishment of foreign currency payment cards, purchase of airline tickets, goods on European marketplaces), as well as to diversify part of their savings, but the main asset for savings in Ukraine remains the dollar and hryvnia.

Forecast.

• Short-term (1-2 weeks): The euro is likely to remain in the range of 48.25-48.60 UAH/€ with the possibility of short exits to 48.80 UAH/€.
• Medium-term (2-3 months): if the Fed cuts the rate by 0.25 bps at the end of October, the euro may strengthen to 48.50-49.20 UAH/€, while a stable rate at the current level will lead to fluctuations in the range of 48.15-48.6 UAH/€.
• Longer-term (6+ months): the baseline scenario is a smooth growth of the euro to 48.90-51.00 UAH/€ amid a weaker dollar and positive trends in the eurozone economy, and in the event of minor consequences from the new tariffs on EU goods imposed by the United States.

Recommendations: dollar or euro – buy, sell, or wait?

USD/UAH

In mid-October, the dollar entered a phase of strengthening amid new signals of reconciliation between the US and China, and the market meanwhile priced in even more strengthening of the US currency in the event of the Fed’s October decision to cut its key rate once again.

Now is not the time to significantly change the structure of savings. The strategy of gradually buying dollars in small tranches remains optimal, which should provide investors with liquidity.

If the Fed leaves the rate unchanged in October, despite expectations, the dollar may strengthen, which will allow you to profitably exit some dollar investments if necessary. For a medium-term strategy, the dollar remains the basis of a currency portfolio. For speculative transactions, short positions are best suited.

EUR/UAH

The euro shows a high level of volatility in the Ukrainian market, which makes it somewhat difficult to strategically manage a portfolio in this currency. Meanwhile, according to expectations in the EU itself, the euro will probably have to strengthen, especially if the Fed decides to cut the rate. This is not a guarantee, but it does create the potential for the euro to appreciate in the medium term.

Buying euros now is a good strategy, as the exchange rate has already rolled back after the summer peaks. The euro can be a logical part of a plan to diversify your savings.

It is not advisable to sell the euro at current levels, as the forecasted growth potential is up to 48.9-51 UAH/€ in a few months.

It can be quite a challenge to play speculatively on short peaks, given the aforementioned high volatility and rather sharp peaks in exchange rate fluctuations. However, the euro can be used for speculative trading due to its high spread.

Overall strategy

High uncertainty remains in the geopolitics and economies of the United States and the European Union, and the ECB and the Fed are influenced by important economic factors and macro statistics for future rate decisions. Investors in the short term should choose the dollar as their anchor, while keeping the euro in their portfolio for diversification and to make quick money on temporary fluctuations. At the same time, it is not worth betting on one currency at a time, as a gradual strategy of buying and selling in parts brings more opportunities.

The Ukrainian market, taking into account the average exchange rate of 45.6 UAH/USD provided for in the draft state budget for 2026, as well as the reaction to the next negative signals of the approaching winter and growing threats from the aggressor country, will have a devaluation trend in the medium and long term. This will provide an additional opportunity to invest in foreign currency and increase the guaranteed safety of foreign currency savings.

This material has been prepared by analysts of the international multiservice product FinTech platform KYT Group 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 further warranty of completeness, obligation to be timely or to be updated or supplemented.

Users of this material should make their own risk assessment 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

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