Analysts of the currency exchange market operator KIT Group together with their colleagues from Globus Bank and Unex Bank (both in Kiev) agree that the average annual exchange rate in 2025 will be close to UAH 45/$1, which corresponds to the figure included in the state budget for the next year.
“The most probable scenario is close to the government forecast, which is reflected in the state budget-2025, the average annual rate of 45 UAH/$1, which allows its fluctuations during the year in the range of 44-46 UAH/$1 with gravitation to a higher mark before the end of the year – so far we have no reason to underestimate the risks of further long-term devaluation”, – said in ‘KIT Group’ at the request of the agency ‘Interfax-Ukraine’.
Experts expect the official exchange rate to weaken to 42.2-42.5 UAH/$1 by the end of this year. They point out that the forecast for the beginning of 2025 depends on macroeconomic factors, in particular on further dynamics of international support, monetary policy of the US Federal Reserve System (FRS) and exchange rate parity in the international markets of the US dollar and euro.
“In the case of stable receipt of financial support from partners and allies and subject to low volatility of external markets, the hryvnia exchange rate will be relatively predictable, although it will hold further devaluation fairway,” analysts emphasize.
In turn, the head of the board of Globus Bank Sergey Mamedov notes that in forecasts of the official exchange rate for the next year, he also predominantly relies on the budgeted figure of 45 UAH/$1.
“We understand that the value of the dollar may depend on a number of factors and circumstances, among which we can highlight the amount of international financial support, which is directed to cover the budget “gap” between expenditures and revenues,” he explains.
Among the important factors affecting the exchange rate dynamics, the banker named GDP growth rate, inflation rate and military actions, which can create pressure on the currency market, prompting more active purchase of foreign currency both in the non-cash and cash markets.
“We cannot rule out that the forecast may not fully come true. However, the weighted average exchange rate of UAH 45/$1 is already a benchmark on which businesses rely when planning their activities for 2025, in particular housing developers who started their projects in the second half of 2024 with planned completion of construction in 2026,” Mamedov cited an example.
According to Globus Bank’s calculations, the hryvnia may weaken to the level of 46-47 UAH/$1 by the end of 2025.
“As of today, the budgeted figures look quite realistic, and at the end of next year, if there are no significant changes in the security situation, the exchange rate range of 45-47 UAH/$1 is highly probable,” Anna Zolotko, director of treasury operations department at Unex Bank, pointed out in a comment to Interfax-Ukraine.
“However, I would not rush into any forecasts right now. The probability that the war will end in 2025 is not zero. And provided that reliable security guarantees are received, the situation in the economy will change rapidly, including with regard to the hryvnia exchange rate,” the banker added.
According to her, in case of realization of a positive scenario – the end of hostilities – we should expect an inflow of foreign investments. In this regard, Zolotko does not exclude that in a certain period there may be a situation when the regulator will have to buy back the currency instead of selling it on the interbank market.
“Obviously, such a scenario looks somewhat fantastic now, but it cannot be ruled out,” summarized Zolotko.
KIT Group analysts explain that the record jump in demand for foreign currency at the end of this year is due to the traditional activation of business settlements on foreign contracts and the growing demand for cash currency among the population.
“However, during the year, we observed a predominantly insignificant spread between buying and selling rates – this is a clear evidence of balance in the market. Whereas in December the spread between buying and selling rates of the dollar reached 0.8-1 UAH, which indicates the growth of pressure on the market,” – experts comment on the situation.
However, due to the importation of record volumes of cash currency and currency interventions of the National Bank, the hryvnia exchange rate managed to keep in relative stability, they point out.
“For next year, an important factor will be an increase in the tax burden on deposits. If banks are unable to offset the decline in deposit yields with interesting offers, there is a high probability of overflow of savings and free hryvnia liquidity into cash currency outside banks, which may also become a powerful factor of pressure on the exchange rate,” the experts explain.
Mamedov notes that, most likely, cash rates of hryvnia to US dollar in 2025 will differ from interbank rates in the range of 0.3-0.5 UAH. Thus, if the rate on the interbank at the end of the year will be at around 46-47 UAH/$1, it may average 46.5-47.5 UAH/$1 on the cash market.
“However, at the moment it is extremely difficult to linearly forecast the situation without taking into account a number of dynamically developing or possible factors,” the banker said.
In turn, Zolotko named among the key factors of record volumes of cash currency imports the increased demand from the population against the background of devaluation expectations, taking into account the restrictions on the purchase of non-cash currency equivalent to UAH 50 thousand/month in one bank, as well as a significant improvement in the channels of cash currency supplies by land transport to Ukraine.
“There is no problem in the numbers themselves. Now the NBU has enough reserves, the projected receipts of international aid, at least for the next year look convincing, so there are enough resources to cover this excess currency demand. At the same time, we should not forget that we are talking primarily about the formation of savings, i.e. some “private” foreign exchange reserves,” the banker emphasized.
As reported, last year the official hryvnia exchange rate devalued by 4.5% – to 37.9824 UAH/$1, while the government laid in the budget-2023 average annual figure of 42.2 UAH/$1, and at the end of the year – 45.8 UAH/$1.
For the current year, the hryvnia has fallen by 10.6% to 42.0390 UAH/$1 as of December 31, while the Cabinet of Ministers laid down an annual average of 40.7 UAH/$1 in the state budget, and 42.1 UAH/$1 at the end of the year.
Analysts KIT Group, annual average rate, GLOBUS BANK, UNEX BANK
