Issue No. 1 – April 2026
Analysis of the current situation in Ukraine’s foreign exchange market
In the first half of April, Ukraine’s foreign exchange market saw sustained elevated demand; however, the National Bank of Ukraine regularly supports the market through currency interventions, which curbs fluctuations toward hryvnia devaluation.
However, key factors putting pressure on the hryvnia remain, as high demand for foreign currency is fueled by importers’ contracts for fuel, which is becoming significantly more expensive due to the conflict in the Middle East. Meanwhile, in Ukraine, the planting season has been proceeding at a brisk pace since the last ten days of March and continues to do so now, which also fuels demand for fuel and, accordingly, partly explains the specific dynamics of pricing in the fuel market. Contrary to analysts’ expectations, the war between Israel and the U.S. against Iran has not yet brought the parties to the negotiating table, but hopes for this in April are quite high, which is influencing the trajectory of oil prices and also putting pressure on the U.S. dollar.
Global Context
In April, the dollar is losing ground against the euro, and the DXY index shows that the US currency has depreciated by 2.2% over the past month.
Regarding Fed rates, the next meeting of the Federal Open Market Committee is scheduled for late April. Recall that at the March meeting, the benchmark rate was left unchanged in the range of 3.5% to 3.75%. At the upcoming April meeting, no surprises are expected, and thus rates are expected to remain at the same level. And this is despite the fact that it is already clear: the conflict in the Middle East has led to a sharp rise in energy prices and worsened economic prospects. However, Fed officials are waiting to assess how the economy reacts to the war in Iran. Consequently, financial markets are pricing in a 99% probability that the Fed will keep the federal funds rate unchanged at the April meeting. Currently, the financial world is concerned about who will become the next Fed chair, as Jerome Powell’s term as chair ends in May. The issue of the regulator’s independence is very important, as there are known attempts by the Donald Trump administration to pressure the Fed to lower rates in order to stimulate economic activity.
One of the most significant factors affecting the economy (both in the US and the EU) is the situation in the Middle East. The International Monetary Fund has already revised its global economic growth forecast for 2026 downward: expected global GDP growth will be 3.1% instead of the previously projected 3.3%.
The war in Iran is having a significant impact on the oil market—the blockade of the Strait of Hormuz is having a serious effect. Oil prices began to fall only in mid-April: over the past two weeks, the price of Brent has dropped from around $108 per barrel to $95 per barrel. The reason is optimism amid potential peace talks between the U.S. and Iran: the U.S. president announced that Tehran had contacted Washington regarding a possible agreement. However, the problems in the oil market remain unresolved, and in its latest monthly report, the IEA stated that global oil supplies suffered “the largest disruption in history”: in March, they were reduced by 10.1 million barrels per day—to 97 million barrels per day.
Due to geopolitical tensions in the Middle East, the U.S. dollar is experiencing high volatility. In mid-April, the EUR/USD exchange rate reached 1.1786, although it stood at 1.1520 as recently as late March. Meanwhile, the outlook for the pair’s future trajectory depends not only on the war but also on the inflationary spike expected in Europe due to rising oil prices and, consequently, fuel costs. There is a high probability that the ECB will raise interest rates as early as this summer. Although ECB President Christine Lagarde recently stated that the European Central Bank has not yet decided on the issue of raising interest rates, as the consequences of the war with Iran for the eurozone economy remain unclear.
The Domestic Ukrainian Context
In April, the Ukrainian foreign exchange market continues to be dominated by excess demand over supply. Fuel importers, whose prices continue to rise, have the greatest impact on demand. Earlier in March, the National Bank sold a fairly significant amount of currency on the interbank market—over $4.4 billion—while in February, for example, it sold $2.99 billion. However, interventions decreased somewhat in April: between April 6 and 10, they totaled $765.87 million. Thanks to the NBU’s participation in trading throughout March and then in the first half of April, the hryvnia managed to strengthen, and the exchange rate did not cross the psychological threshold of 44 UAH/USD.
In the cash market in April, demand for dollars and euros remained steady but declined significantly compared to the peak growth in March. Last month, cash currency purchases rose to $2.39 billion, while net cash currency purchases by the public in March amounted to $968 million. In April, thanks to a fairly stable exchange rate situation, there is no rush at cash desks and exchange offices, nor is there a shortage of cash dollars and euros.
In the macroeconomic sphere, Ukraine is in a rather difficult period of waiting. The first review of the International Monetary Fund program is scheduled for June 2026, and provided the review is successful, the fund will disburse the first tranche of $686 million. Meanwhile, the European Union has yet to resolve the issue of disbursing funds to Ukraine under a €90 billion loan program. These resources are critically important for the stability of the Ukrainian economy and for financing the budget deficit. However, the decision to grant the loan was previously blocked by the position of Hungary’s former Prime Minister Viktor Orbán. Recently, Péter Magyar, who became Hungary’s new prime minister, stated that the country would lift its veto on the €90 billion EU loan to Ukraine as soon as oil supplies from Ukraine to Hungary via the pipeline are restored. Oil supplies are expected to resume in May, as Ukrainian President Volodymyr Zelenskyy stated during a joint press conference with German Chancellor Friedrich Merz that repair work on the pipeline would be completed by the end of April.
U.S. Dollar Exchange Rate: Trends and Analysis
In the first half of April, the hryvnia strengthened: while the NBU’s official exchange rate stood at 43.91 UAH/USD at the beginning of the month, it was 43.51 UAH/USD as of April 16. However, the interbank market was still influenced by increased demand, while supply was primarily shaped by interventions from the National Bank of Ukraine. The interbank rate stood at 43.85 UAH per dollar in early April and reached 43.44–43.5 UAH/dollar by mid-month.
In April, exchange rate fluctuations in the cash market stabilized, and the exchange rate moved toward a strengthening of the hryvnia. Overall, the buying rate for cash dollars in mid-April stood at 43.10–43.35 UAH/USD, whereas at the beginning of the month the buying rate was in the range of 43.40–43.60 UAH/USD. The selling rate for cash dollars in mid-April was 43.7–43.8 UAH/USD, while at the beginning of April, the selling rate at bank teller windows and currency exchange offices was in the range of 43.99–44.15 UAH/USD. As for the spreads between the buying and selling rates, they narrowed slightly—to 0.3–0.55 UAH/USD—which indicates a stabilization of the situation and a reduction in currency risk for institutions, and also suggests a positive outlook regarding the absence of panic demand for cash currency in the coming weeks.
Key influencing factors:
· Reduction in the volume of currency interventions by the NBU: The National Bank remains the main market maker in the foreign exchange market; however, in April, the regulator’s dollar sales volumes were already lower than in March, and exchange rate fluctuations were smoother.
· Strengthening of the hryvnia exchange rate in April: this was facilitated by a temporary decline in demand for foreign currency from importing companies, as well as a noticeable drop in demand in the cash market.
· International factors: The dollar is losing ground in the global market amid the complex situation in the Middle East and expectations of de-escalation between Iran and the U.S., which is driving investors back to euro-denominated assets.
· Market behavioral expectations: The dollar remains a stable, liquid asset in the domestic market, and the hryvnia’s short-term strengthening provides an incentive for active investment in this currency.
Forecast
· Short term (1–2 weeks): base range of 43.70–44.20 UAH/USD, with likely fluctuations toward hryvnia depreciation, though rebounds toward the national currency’s strengthening are also possible.
· Medium term (2–3 months): 44.20–44.85 UAH/USD. On the international market, fluctuations in the dollar exchange rate will be influenced by the situation in the Middle East and potential negotiations between Tehran and Washington. There is a high probability that the Fed will not change rates at least until summer, which will give investors confidence in the growth potential of the U.S. economy despite all the risks caused by the war in Iran. A trend toward dollar strengthening is possible, especially after the situation in the Middle East stabilizes.
· Long-term (6+ months): the baseline scenario is a devaluation of the hryvnia to 44.5–45.5 UAH/$. The national currency will remain under pressure from both external and internal factors, with the most significant being signals from partners regarding continued support for Ukraine, the receipt of a tranche from the IMF, and the $90 billion loan program from the EU.
Euro exchange rate: dynamics and analysis
In April, the euro’s exchange rate against the hryvnia rose due to the global trend of the euro strengthening and the U.S. dollar weakening, which correspondingly affected the euro’s exchange rate in Ukraine. April began with the official euro exchange rate at 50.45 UAH/EUR, and as of April 16, the rate reached 51.27 UAH/EUR.
Meanwhile, there was no increased demand for the euro in Ukraine’s cash market in April, as the stabilization of the dollar’s exchange rate on the interbank and cash markets dampened the frenzy. At currency exchange offices and bank teller windows, the euro exchange rate fluctuated as follows during the first half of April: in early April, the buying rate was 50.0–50.7 UAH/EUR and the selling rate was 51.0–51.2 UAH/EUR, while in mid-April, the buying rate rose to 50.85–51.0 UAH/EUR. The strengthening of the euro on the global market was also reflected in the selling rate for cash euros—the rate reached 51.5–51.8 UAH/EUR.
Spreads between exchange rates widened again in mid-April amid continued uncertainty regarding the euro’s trajectory on the global market; consequently, banks have again set spreads at 0.5–1 UAH/EUR instead of the previous 0.5–0.6 UAH/EUR.
Key influencing factors:
· The euro is strengthening on the international market amid a decline in the US dollar: the euro-dollar exchange rate rose to 1.1786 in April, which influenced the exchange rate trajectory on Ukraine’s domestic market.
· Investors are returning to euro-denominated assets as they lose confidence in the US dollar: the conflict in the Middle East is not over, and the ECB may raise rates as early as this summer due to inflationary pressures.
· Declining demand for the euro in Ukraine: The public bought a large amount of currency in March, and in early April, ahead of Easter celebrations, currency sales predominated as people made necessary preparations for the holiday. The stable hryvnia-to-dollar exchange rate fostered expectations of no turmoil in the currency market, and demand for the euro fell.
Forecast:
· Short term (2–4 weeks): if the euro continues to strengthen on the global market, the euro may remain within the 51.0–51.90 UAH/€ range on the Ukrainian market.
· Medium term (2–4 months): the euro may appreciate to 52.5 UAH/€. Falling oil prices and updated data from the ECB on eurozone inflation could strengthen the euro’s position.
· Long term (6+ months): if negotiations between Iran and the U.S. are successful and following the Fed’s decision on the next rate cut, the exchange rate may settle within the range of 52.80–53.60 UAH/€.
Recommendations for businesses and investors
Geopolitical turbulence influences financial decisions and confidence in currency assets. Key directions of change will be determined by the negotiation track between Tehran and Washington. Investors need to monitor the news, especially statements from Iran.
Fed rates will influence the future exchange rate trajectory of the EUR/USD pair. Currently, traders are confident in rate stability, but Jerome Powell’s departure from the chairmanship in May could throw a wrench in the works.
The U.S. labor market as an indicator. Investors should study official publications from the U.S. Department of Labor to react in a timely manner to the high probability of another round of Fed rate cuts.
Oil prices move in tandem with currency quotes. A significant drop in oil prices would signal improved prospects for the U.S. dollar and, consequently, the potential for a slight decline in the euro’s exchange rate.
Focus on safe-haven assets. Geopolitical conflicts and high risks of a slowdown in the growth rates of the world’s major economies are making it increasingly relevant to invest in straightforward instruments, including the dollar and the euro.
ECB decisions will influence the euro exchange rate. As inflation rises in Europe, the ECB may raise base rates. This could weaken the euro’s position.
The key requirement is high liquidity. Investors can build their portfolios in various currencies, but given liquidity, the dollar and the euro remain the core assets. Other currencies that can be used in your strategy include the British pound, the Swiss franc, and the Polish zloty.
The US dollar is at the center of the currency strategy. Despite the uneven fluctuations of the dollar exchange rate on the global market, dollar holdings in a portfolio can range from 40% to 70%, as the dollar’s role as the world’s primary reserve currency and the devaluation trends regarding hryvnia exchange rate fluctuations in Ukraine determine the absolute importance of dollar holdings.
The NBU’s discount rate as a signal for a short-term shift to the hryvnia. If the NBU raises the discount rate, a small portion of holdings can be reallocated to hryvnia-denominated assets—short-term deposits or government bonds. However, this involves investing approximately 10–15% of the portfolio.
What’s important in the news. First and foremost, information on negotiations between Iran and the U.S., oil market prices, new decisions by the Fed and the ECB, as well as analysis of inflation levels in Europe and the U.S. In Ukraine, the main drivers of currency market behavior will be the situation on the fuel market, possible large-scale shelling of infrastructure facilities by the aggressor, as well as news regarding the receipt of tranches from partners and creditors.
This material was prepared by analysts at KYT Group, an international multi-service product FinTech platform, 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 liability for any consequences arising from the use of this information. All information is provided “as is,” without any additional warranties of completeness, obligations regarding timeliness, or updates or supplements.
Users of this material must independently assess risks and make informed decisions based on their own evaluation and analysis of the situation using various available sources that they themselves deem sufficiently qualified. Before making any investment decisions, we recommend consulting with an independent financial advisor.
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