Issue No. 1 – February 2025
The purpose of this review is to provide an analysis of the current situation on the Ukrainian foreign exchange market and a forecast of the hryvnia exchange rate against key currencies based on the latest data. We review current conditions, key influencing factors, and likely scenarios.
February 2025 started quite predictably for the Ukrainian FX market, without any sharp jumps or sudden shocks. After the traditional New Year’s Eve surge in demand for foreign currency, the market has gradually returned to a calmer state, and the hryvnia exchange rate continues to balance between domestic factors, such as the NBU’s policy and the country’s balance of payments, and global trends, such as the policies of the US Federal Reserve and the ECB.
The US Federal Reserve continues to keep interestrates high, strengthening the dollar, while the European Central Bank has cut interest rates, weakening the euro. This creates the preconditions for maintaining the current exchange rate dynamics, but also adds unpredictability for those planning currency transactions.
Analysis of the current situation
The hryvnia is gaining stability again
As predicted at the end of January, after the peak growth of the dollar (up to 42.28 UAH/$), the situation has gradually stabilized, and now the hryvnia is in the range of 41.37-42 UAH/$.
What contributed to this?
The situation is somewhat different for the euro. After the ECB unexpectedly cut interest rates in February, investors’ funds began to flow into the dollar en masse, which led to a weakening of the European currency. As a result, the euro exchange rate in Ukraine fell to the level of 43.2-43.9 UAH/€, and has been showing a steady downward trend for three months.
The market spread between the purchase and sale of key currencies has remained relatively stable for a long time: 50-58 kopecks for the dollar and 63-68 kopecks for the euro. This indicates a balance between supply and demand and can be considered both an indicator of the lack of appetite for speculation among currency market operators and an indicator of the absence of panic among the population.
Dollar exchange rate forecast
Short-term forecast (2-4 weeks)
The dollar exchange rate may fluctuate in the range of UAH 41.8-42.5/$. The NBU continues to actively restrain sharp fluctuations, as evidenced by the sale of foreign currency from reserves, and no major inflationary risks are expected in the coming month.
However, risks remain:
Medium-term forecast (2-4 months)
During the first half of the year, the hryvnia may gradually weaken to 44 UAH/$. Main reasons:
Long-term outlook (6+ months)
If the current macroeconomic picture persists, the dollar may reach 45 UAH/$ by the end of the year, although this scenario is entirely dependent on the success of the government’s economic policy and the stability and sufficiency of external financing inflows.
Euro exchange rate forecast
Short-term forecast (2-4 weeks)
The euro will be in the range of 43.0-44.2 UAH/€, with a gradual correction to the lower bound due to the euro’s weakness on the global market.
Medium-term forecast (2-4 months)
The euro may fall to 42.5 UAH/€ if the eurozone stagnation intensifies and the US Federal Reserve maintains its tight policy.
Long-term outlook (6+ months)
If the EU fails to recover from the economic downturn, the euro may remain weaker, allowing the hryvnia to maintain relative stability against it, and in some periods, the hryvnia may even strengthen against the euro.
Recommendations for businesses and investors
In the short term (up to 1 month), the main task is to ensure liquidity and minimize currency risks. Businesses should have a portion of their working capital in foreign currency, especially if their expenses depend on imports. Keeping funds in short-term deposits in US dollars or euros will help protect against exchange rate fluctuations. For private investors, now is not the best time to actively enter long positions in euros due to the weakness of the European currency, while the dollar remains a stable instrument. For those considering currency speculation, there may be opportunities to make money on short positions.
Medium-term strategies (2-4 months) should focus on building a balanced portfolio with a predominance of the dollar. As the US Federal Reserve is in no hurry to change its tight monetary policy, the dollar remains the most stable currency for capital preservation. Investors who want to diversify their portfolio should pay attention to assets in Swiss francs and British pounds, as they are less prone to strong fluctuations under the influence of geopolitical risks. Cryptocurrencies can be an interesting tool for short-term speculation, but they remain high-risk due to their high volatility.
In the long term (6+ months), the most important factor isto protect capital from devaluation risks. The main savings should be kept in hard currency, as even with a moderate devaluation trend, the hryvnia will continue to lose value. Alternative assets, such as gold, can be an effective means of preserving value, but the current high prices make it less attractive for immediate entry – it is worth waiting for a possible correction.
This material was 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 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 company 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 Ukrainian financial market, is among 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.
