Issue No. 2 – June 2026
Analysis of the Current Situation on Ukraine’s Foreign Exchange Market
In June, the hryvnia continued to trend toward devaluation, but by the end of the month, the official exchange rate had not exceeded 45 UAH per dollar, remaining at 44.85 UAH/USD. However, on the cash foreign exchange market, banks and currency exchange offices have been setting selling rates significantly higher than the official rate—45.05–45.30 UAH/USD—for over two weeks now.
On Ukraine’s interbank foreign exchange market, the National Bank of Ukraine (NBU) remains the primary seller, covering importers’ requests primarily thanks to international aid tranches. The National Bank expects that the upcoming receipt of international aid under the Ukraine Support Loan program and progress in negotiations with the IMF regarding the EFF program will significantly strengthen its ability to maintain the stability of the foreign exchange market. In fact, market expectations currently suggest that a managed devaluation of the hryvnia will take place over the next three months, though the pace will not be rapid. Meanwhile, one of the factors supporting the hryvnia is the situation on the international market, particularly the drop in oil prices on the global market. This should stabilize oil traders’ pricing policies and somewhat weaken demand for foreign currency.
Global Context
In June, international markets were awaiting the Federal Reserve Committee’s decision on the key interest rate. Forecasts indicated that the rate would remain unchanged. Following the Federal Reserve Committee’s meeting, this is exactly what happened—the Committee decided to maintain the target range for the federal funds rate at 3.5% to 3.75%. The Fed’s statement noted that economic activity is expanding at a steady pace, despite heightened uncertainty, which is partly driven by the conflict in the Middle East. “Growth in labor productivity and capital investment remains strong. Job growth is keeping pace with labor force growth, and the unemployment rate has remained virtually unchanged. Inflation remains elevated relative to the Committee’s 2% target, partly reflecting supply shocks that have led to price increases in certain sectors, particularly in energy,” the Fed explained in justifying its decision to keep rates unchanged.
The situation in the Middle East is having a significant impact on the markets, as uncertainty regarding the future course of the conflict between the U.S. and Iran is leading to increased volatility in both the oil and capital markets. In June, markets were buoyed by hopes for a swift end to the war and the reopening of the Strait of Hormuz. On June 17, the U.S. and Iran signed a 14-point Memorandum of Understanding (MoU) that included “an immediate and definitive cessation of military operations on all fronts.” In effect, Iran agreed to make “every effort to ensure the safe passage of commercial vessels free of charge for 60 days.” However, by the end of June, attacks resumed from both Iran and the U.S. First, an Iranian missile struck a cargo ship in the Strait of Hormuz, after which the U.S. launched a series of strikes against Iran, hitting several targets—a move the U.S. Central Command described as a direct response to “ongoing aggression” against commercial shipping. Iran later retaliated with strikes on U.S. bases in Kuwait and Bahrain. It is currently unclear whether the ceasefire allegedly agreed upon by the U.S. and Iran will actually hold. Meanwhile, the Strait of Hormuz is a key waterway for oil and gas shipments, and therefore the ability to transport oil through it affects oil prices.
Global oil prices are constantly influenced by the situation in the Middle East. In early June, the price of Brent crude reached $97 per barrel, but it then declined daily throughout the rest of the month. However, after attacks resumed in late June, prices began to rise again (reaching $74 per barrel on June 29), as traders assessed the fragile ceasefire in the Persian Gulf.
The U.S. dollar exchange rate also reacts sharply to international news and global uncertainty. However, there is noticeable optimism here—over the month, the DXY index showed a 2.23% appreciation of the dollar. While the EUR/USD exchange rate stood at around 1.1611 dollars per euro in mid-June, by the end of June it had fallen to 1.1407 dollars per euro. This trend can be explained by the increasing likelihood of a Fed rate hike in 2026, as well as optimism regarding the U.S. economic outlook.
Domestic Ukrainian Context
Demand for foreign currency remained consistently high in June, and to prevent the hryvnia from further devaluation, the National Bank had to increase its foreign currency sales, meaning that interventions rose. Over the 26 days of June, the NBU sold more than $4.63 billion on the market; by comparison, in May, the amount of foreign currency sold by the NBU on the interbank market was $3.03 billion. Consequently, pressure on the hryvnia is intensifying due to both large volumes of various imports (including fuel and electrical equipment) and the strengthening of the dollar on the international market.
As of June 30, the official exchange rate stood at 44.85 UAH/USD, having strengthened compared to June 11, when it reached 44.97 UAH/USD, but having weakened compared to early June, when it was 44.27 UAH/USD.
Inflows of international aid are expected to replenish international reserves, thereby allowing the NBU to maintain its flexible exchange rate policy by increasing currency sales on the interbank market while preventing the hryvnia from depreciating rapidly. At the end of June, European Commission President Ursula von der Leyen announced the allocation of the first tranche of macroeconomic assistance to Ukraine—3.2 billion euros from a 90-billion-euro loan. This 3.2 billion euros is the first of three tranches of macro-financial assistance planned for 2026. In total, Ukraine is set to receive 8.35 billion euros under this loan this year; the second tranche, amounting to approximately 3.7 billion, is expected in the fall, and the third tranche, totaling about 1.45 billion euros, is scheduled to be disbursed at the end of the year.
There is already positive news regarding the tranches under Ukraine’s loan program with the IMF. Prime Minister Yulia Svyrydenko met in June with IMF First Deputy Managing Director Dan Katz, where the parties discussed the results of the first review of the Extended Fund Facility (EFF) program and agreed on the next steps in their cooperation. According to her, the IMF Executive Board plans to approve the next tranche for Ukraine, amounting to $690 million, by mid-July.
U.S. Dollar Exchange Rate: Trends and Analysis
In June, the hryvnia managed to stabilize and avoid crossing the psychological threshold of 45 UAH per dollar; however, as previously mentioned, this is primarily due to increased interventions by the National Bank, which exceeded $4.63 billion over the four weeks of June.
As of the end of June, the official exchange rate stood at 44.85 UAH/USD, whereas at the beginning of the month it was 44.27 UAH/USD. On the interbank foreign exchange market on June 29, trading took place at a rate of 44.84–44.88 UAH/USD.
In the cash market, the dollar is already trading above the 45 UAH per dollar mark, and the exchange rate in the retail market differs quite significantly from the official rate. While at the beginning of June the buying rate was within the range of 43.85–44.05 UAH/USD and the selling rate was 44.4–44.6 UAH/USD, on the last day of June the buying rate was 44.5–44.8 UAH/USD and the selling rate was 45.05–45.30 UAH/USD. The spreads between the buying and selling rates on the cash market widened to 0.5–0.75 UAH/USD in June.
Key influencing factors:
· Demand for foreign currency on the interbank market continues to grow, and the hryvnia is depreciating. The NBU is covering importers’ requests through currency interventions, the volume of which increased significantly in June—to over 4.63 billion USD
· There are no significant fluctuations in the cash market, but the market has crossed a psychological threshold. Expectations of further devaluation persist, and banks and currency exchange offices are selling the dollar at a rate of 45.05–45.30 UAH/USD.
· International factors: The U.S. and Iran signed a memorandum, but the parties to the conflict subsequently resumed military operations. This is putting pressure on oil prices, which are rising. Meanwhile, the dollar is being supported by expectations that the Fed will raise rates after all.
· Market sentiment: On the international market, all attention is currently focused on U.S. labor market statistics and inflation data, which could form the basis for the Fed’s July rate review. In Ukraine, amid trade imbalances and a lack of sufficient foreign currency supplies from exporters to meet market demand, the NBU remains the main market maker; demand for foreign currency is rising, and expectations of devaluation are intensifying.
Forecast
· Short term (1–2 weeks): base range of 44.80–45.25 UAH/USD, with likely short-term fluctuations toward a stronger hryvnia.
· Medium term (2–3 months): 45.10–45.60 UAH/USD. The dollar’s strengthening on the global market increases the likelihood of a rapid appreciation of the U.S. currency in the Ukrainian market as well. The future trajectory of the euro/dollar pair depends on the Fed’s decisions regarding changes to the key interest rate and the situation in the Middle East.
· Long term (6+ months): In the baseline scenario, no changes are expected—the hryvnia will depreciate, however, the extent of the devaluation depends on a number of factors, including dollar exchange rate fluctuations on the international market, the government budget deficit, the NBU’s monetary policy, the level of international aid, the volume of international reserves, and the country’s need for new multibillion-volume energy imports. By the end of 2026, the exchange rate could reach 46.50 UAH/$.
Euro Exchange Rate: Trends and Analysis
In June, the euro fell against the hryvnia on the domestic market amid fluctuations in the international currency market, where the dollar regained ground. Thus, while the month began with an official exchange rate of 51.55 UAH/EUR, as of June 30, the official euro exchange rate stood at 51.16 UAH/EUR.
The cash market followed the trends in the global market, resulting in a noticeable strengthening of the hryvnia against the euro in the domestic retail segment. While in early June the buying rate ranged from 50.85 to 51.3 UAH/EUR and the selling rate from 51.75 to 51.90 UAH/EUR, as of June 30, the buying rate for the euro was already 50.50–50.90 UAH/EUR, and the selling rate was 51.40–51.60 UAH/EUR. The spreads between the buying and selling rates for the euro remained virtually unchanged in June, ranging from 0.55 to 0.85 UAH/EUR.
Key influencing factors:
· The euro has weakened noticeably on the international market, driven by the strengthening of the dollar amid expectations of a possible Fed rate hike. In June, the euro lost ground against the backdrop of expectations that the Fed would raise rates, which is forecast to occur in late July.
· Investors are opting for the dollar as they anticipate a Fed rate hike. Interest in the euro is waning, as forecasts suggest that higher rates will boost the value of U.S. bonds, making dollar-denominated Treasury securities a more attractive investment vehicle.
· Moderate demand for the euro is evident in Ukraine’s cash market. Banks and currency exchange offices are not experiencing a shortage of euro cash.
Forecast:
· Short term (2–4 weeks): On the Ukrainian market, the euro may remain within the range of 51.20–51.50 UAH/€.
· Medium term (2–4 months): if the dollar continues to strengthen on the international market and the euro depreciates against the dollar, the euro may fluctuate in Ukraine within the range of 51.15–51.65 UAH/€.
· Long term (6+ months): The euro exchange rate may remain within the range of 51.80–53.50 UAH/€. The key influencing factors remain the situation in the Middle East, the Fed’s upcoming decisions on key interest rate changes, inflation rates in the U.S. and the EU, and whether the ECB will decide to make another rate change in 2026.
Recommendations for Businesses and Investors
July will not bring stability—exchange rate fluctuations in the euro/dollar pair are likely to intensify. This will require flexibility in investment plans, but also close attention to international news and factors affecting the exchange rates of major currencies.
The dollar is regaining ground, while the euro is losing it. The dollar is currently being supported by high inflation linked to the energy shock, as well as the agreement between the U.S. and Iran and optimism that the parties to the conflict will adhere to its terms. For investors, this means confidently investing in the dollar.
The Fed may adjust interest rates in 2026. Rising inflation in the U.S. has deprived the Fed of the opportunity to cut rates, and markets are now fully pricing in a possible rate hike by October. This will continue to support the U.S. dollar and put pressure on the euro. For investors, this means a willingness to focus on the dollar, but at the same time a need to diversify assets by allocating a portion of investments to the euro.
The conflict between the U.S. and Iran remains unresolved. Since the matter is not yet settled and operations in the Middle East continue, the dollar remains under pressure from the global situation. For investors, this means the need to consider several scenarios and have flexible options for exiting certain assets in order to reallocate funds to others.
Investment liquidity is at the heart of the strategy. The rather unexpected fluctuations in the euro/dollar pair—where the dollar managed to strengthen rapidly, while the euro has suffered significant losses—only underscore the need to build a portfolio that takes all factors into account, while keeping the most liquid currencies—the dollar and the euro—at the core of the strategy, although it makes sense to reduce the euro’s share in the portfolio to 15–20%.
Investment security is a key factor when choosing a strategy. Against the backdrop of the hryvnia’s prolonged depreciation trend, it is advisable to use the hryvnia for specific transactions and day-to-day expenses, but to avoid establishing long-term investment plans in the national currency.
Investors’ sharp shift toward the dollar in the global market leaves no doubt: investing in the dollar is an extremely reliable source of profit. Currently, all data point to robust growth in the U.S. economy, so the U.S. dollar remains the most liquid currency, and investors should maintain at least 60% of their currency portfolio in dollars.
Diversifying your currency portfolio—through liquid currencies.
The euro’s pullback to 51.16 UAH/USD presents new opportunities to add the euro to your portfolio in line with your chosen individual strategy. However, this is also an opportunity to acquire some other liquid currencies, particularly British pounds and Swiss francs.
Keep an eye on decisions by the U.S. and EU central banks, as well as on inflation and labor market data in the U.S. and the European Union. Over the coming month, this information will be of paramount importance to investors, as it will directly influence potential interest rate changes by central banks.
A strong or weak dollar—that’s the key question for the next six months. The dollar’s exchange rate will be most influenced by the implementation of the agreement between the U.S. and Iran, inflation trends in the U.S., and changes to the Fed’s benchmark rate. A rate cut could provide support for the euro.
Key news to watch. It is essential to monitor developments related to oil prices, the U.S.-Iran agreement and its practical implementation, as well as U.S. labor market and inflation data. The most important signal for adjusting strategy will be the Fed’s announcement regarding a change in the benchmark interest rate. The upcoming Federal Open Market Committee (FOMC) meeting in late July will indicate the potential future trajectory of the euro/dollar pair. In Ukraine, the main factors influencing the foreign exchange market will be the state of international reserves, the receipt of loan tranches and aid from partners, the situation in the energy sector, and possible developments on the front lines.
This material was prepared by analysts at KYT Group, an international multi-service 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 guarantees of completeness, obligations regarding timeliness, or updates or additions.
Users of this material should independently assess risks and make informed decisions based on their own evaluation and analysis of the situation using various available sources that they personally deem sufficiently reliable. We recommend consulting with an independent financial advisor before making any investment decisions.
REFERENCE
KYT Group is an international, multi-service, marketplace-style FinTech platform that provides financial companies with access to services for promoting their offerings, as well as advertising and consulting services.
The current investment boom around artificial intelligence may slow sharply if the expected return from the technology turns out to be lower than forecasts, the Bank for International Settlements (BIS) warns in its new annual economic report.
According to Experts Club, optimism around AI has become one of the factors that supported the global economy and financial markets in recent months. Investments in semiconductors, data centers and energy infrastructure have grown, while large technology companies have become one of the main drivers of capital expenditures.
However, it is precisely the scale and speed of this process that create new risks. BIS compares the current AI boom with previous technological investment cycles — the construction of canals in the 1830s, the railway boom in Great Britain in the 1840s, electrification in the late 1920s and the dot-com boom of the late 1990s.
The common feature of these periods was that a real technological breakthrough attracted more capital than commercial returns could justify. As a result, such booms ended with a reversal of investment and a downturn that affected not only individual companies but also the economy as a whole.
According to BIS, the five largest hyperscalers — major providers of cloud and computing capacity — may spend more than $1 trillion on AI-related capital investments in 2025-2026. These commitments are already outpacing companies’ profits and free cash flow, which is why part of the financing is being raised through debt markets.
BIS General Manager Pablo Hernández de Cos, quoted by The Wall Street Journal, said that competition for future market share may have led to excessive investment in AI. If the technology does not deliver the expected return, the sector may prove vulnerable, and the current investment boom may abruptly come to an end.
BIS is particularly concerned not only about the volume of investments itself, but also about how they are financed. This concerns the debt of hyperscalers, AI laboratories, equipment suppliers, construction and engineering contractors involved in creating data centers, energy capacity and other infrastructure.
If the largest customers slow down or stop capital expenditures, companies in the supply chain may face a sharp drop in revenue and difficulties servicing debt. This may increase pressure on fixed-income markets, corporate bonds and private credit.
BIS emphasizes that this is not about denying the long-term potential of artificial intelligence. On the contrary, AI may increase productivity in the economy, but the transition to this model is accompanied by uncertainty: it is still unclear how quickly companies will be able to introduce the technology into real production processes and monetize it on a scale sufficient to justify current investments.
Another risk is related to infrastructure constraints. The development of AI is already facing shortages of electricity, network equipment, powerful semiconductors and opportunities for rapid construction of data centers. These constraints may increase the cost of projects and at the same time intensify overinvestment if companies seek to secure capacity in advance through long-term contracts.
For the financial system, the key threat is that possible disappointment in the return from AI may coincide with already existing vulnerabilities — high valuations of technology company stocks, rising debt, activity in the non-bank financial sector and increased market sensitivity to changes in interest rate expectations.
In this scenario, the AI boom may turn from a source of growth into a factor of financial instability. First, there may be a decline in capital investment and a fall in orders in the infrastructure chain, then a deterioration in the position of borrowers, a widening of credit spreads and a revaluation of AI-related assets.
For businesses and investors, the main conclusion of BIS is that technological progress does not cancel financial discipline. Even if artificial intelligence really becomes one of the key technologies of the coming decade, this does not guarantee that all current investments will pay off, or that all companies participating in the race will remain resilient.
BIS, or the Bank for International Settlements, is an international financial organization headquartered in Basel, Switzerland. The bank was established in 1930 and is considered one of the oldest international financial institutions. Its main task today is to promote global monetary and financial stability through cooperation among central banks, research, statistics, analytical reports and support for international financial standards. BIS is often called the “bank for central banks” because it works primarily with central banks and international financial organizations.
Ukrainian companies that enter foreign markets, work with international corporations, investors, banks or participate in tenders are increasingly facing the need to have a business identifier that is understandable to the world. One such tool is the D-U-N-S Number — a unique nine-digit company number in the global Dun & Bradstreet system.
The D-U-N-S Number is used to identify a legal entity, compare data about a company, verify its corporate profile and its links with other market participants. For a foreign partner, the presence of such an identifier simplifies the initial verification of a counterparty and reduces the number of manual procedures.
For Ukrainian exporters, manufacturers, service providers, technology companies and enterprises planning to attract international financing, the D-U-N-S Number can become part of a broader infrastructure of trust. It does not replace financial reporting, audit or compliance, but it helps a company be visible in global business systems.
“For Ukrainian business, after the start of the full-scale war, the issue of trust became no less important than the issue of price or quality. A foreign partner needs to quickly understand whom they are dealing with. The D-U-N-S Number gives a company the opportunity to be recognizable in the international environment and reduces the barrier of first contact,” said Maksym Urakin, Director of Development and Marketing at Interfax-Ukraine, Head of the D&B-Interfax-Ukraine business unit, PhD in Economics.
According to him, for Ukraine’s recovery it is important that Ukrainian companies not only receive assistance, but also enter into international rules for working with data, transparency and counterparty verification.
Dun & Bradstreet is an international company in the field of business data and analytics, founded in 1841. The company provides tools for business identification, counterparty verification, assessment of credit and commercial risks, compliance and supply chain analysis. One of D&B’s key tools is the D-U-N-S Number — a unique nine-digit company identifier used in international business practice. In Ukraine, D&B’s interests are represented by the Interfax-Ukraine agency. The partnership is aimed at expanding Ukrainian companies’ access to international business data, supporting exports, attracting financing and integrating into global supply chains. Interfax-Ukraine is an independent Ukrainian news agency that has been operating since 1992.
The “Chervona Zirka” Chemical and Pharmaceutical Plant (Kharkiv) produced goods worth 546.883 M UAH in 2025 and sold goods worth 526.744 M UAH.
According to a report published on the company’s website, the cost of goods sold in 2025 amounted to 213.733 million UAH.
The company reported that 96.4% of its output consisted of pharmaceutical products in the form of tablets, capsules, ointments, and tinctures.
Meanwhile, production of perfumes and cosmetics, which accounted for 2.9% of total sales, amounted to 15.121 million UAH.
“Despite the difficult times our country is facing, the company operated as usual in two shifts, with production capacity utilized at 67%. Currently, the company has increased its production and sales volumes compared to the pre-war period. Sales of finished products were primarily conducted on a credit basis, sometimes with payment terms of up to 60 days or on a prepayment basis. Sales volumes for the reporting year amounted to approximately 44 million UAH per month. “The share of the Ukrainian market is up to 2%; there were no exports in 2025,” the company’s report states.
“Chervona Zirka Chemical and Pharmaceutical Plant is a Ukrainian manufacturer of pharmaceuticals, therapeutic cosmetics, and dietary supplements.
According to data from the OpenDataBot system, the company’s net profit for 2024 was 24.063 million UAH, which is 64% more than in 2023.
The company’s ultimate beneficiary is Olena Galkina.
KHARKIV, MANUFACTURING, MEDICATION, PHARMACEUTICALS, Червона зірка
The Varus supermarket chain will open its first store in Vinnytsia on July 3, according to the company’s press office.
The new store is located in the PetroCenter shopping mall (70 Kotsyubynskoho Ave.). It offers everything needed for daily and family shopping: fresh meat and fish, fruits and vegetables, dairy products, baked goods, ready-to-eat meals, and delicacies. The store will feature a VARUS CAFE serving coffee and pizza, a bakery section, a WOK station, self-checkout lanes, and Scan&Go for quick purchases. Customers can also order items on VARUS.UA for pickup at this store at a convenient time.
According to the Ukrainian Council of Shopping Centers, this store is opening on the site of the former “EKO Market” supermarket, which was the chain’s last location in the city.
Varus is a national supermarket chain represented in Ukraine’s grocery retail market by the company “Omega.” The first store opened in 2003 in Dnipro. In 2025, seven new stores were opened. Currently, the total number stands at 119 supermarkets in various cities across Ukraine.
The chain operates in several formats: traditional supermarkets, To Go stores, and the Varus.ua online store.
According to the company, its network’s turnover in 2025 increased by 19.5% to 28.8 billion UAH. Tax payments to budgets at all levels totaled 1.99 billion UAH, which is 13.45% more than in 2024.
According to Opendatabot data, the owner of Omega LLC is the Cypriot company “Viant Enterprises Limited.” Valeria Kiptika and Ruslan Shostak are listed as the ultimate beneficiaries.
The article presents key macroeconomic indicators of Ukraine and the global economy as of the end of March 2026. The analysis was prepared on the basis of current data from the State Statistics Service of Ukraine (SSSU), the National Bank of Ukraine (NBU), the International Monetary Fund (IMF), the World Bank, as well as leading national statistical agencies (Eurostat, BEA, NBS, ONS, TurkStat, IBGE). Maksym Urakin, PhD in Economics and founder of the Experts Club information and analytical center, presented an overview of current macroeconomic trends that determined the situation in Ukraine and the world at the beginning of 2026.
Macroeconomic indicators of Ukraine
As of the end of March 2026, the Ukrainian economy remained in a mode of managed macrofinancial stabilization, but the first quarter showed a noticeable deterioration in the balance of risks compared with the beginning of the year. After a relatively favorable January, when inflation was declining, reserves were at a historically high level, and the NBU began cautious easing of interest rate policy, the situation became more complicated in February-March. Inflation accelerated again, international reserves declined for the second month in a row, the foreign exchange market required significant interventions by the regulator, and the first quarterly GDP estimate showed a decline.
According to the preliminary estimate of the State Statistics Service, Ukraine’s real GDP in Q1 2026 decreased by 0.6% compared with Q1 2025, and by 0.7% compared with the previous quarter, taking into account the seasonal factor. Nominal GDP amounted to UAH 2,047.2 billion. This became an important signal that economic recovery remains unstable and highly sensitive to energy, military and foreign trade shocks.
In its April Inflation Report, the National Bank worsened its forecast for Ukraine’s real GDP growth in 2026 to 1.3%, taking into account further destruction of infrastructure, larger electricity deficits and the effects of a significant increase in energy prices. This means that even if international support is maintained and the situation on the foreign exchange market remains controlled, the economy is entering 2026 on a lower growth trajectory than previously expected.
“The first quarter of 2026 showed that the Ukrainian economy has still not moved into a classic recovery phase. We have a stabilization model that works thanks to international financial support, budget expenditures, business adaptation and NBU policy. But the decline in GDP in the first quarter indicates that the margin of safety remains limited. Energy destruction, labor shortages, weak exports and military risks are quickly affecting the real sector. Therefore, the main task for 2026 is to gradually restore the productive base of the economy,” Urakin noted.
Inflation dynamics in March also became less favorable. According to the State Statistics Service, as commented on by the NBU, consumer inflation accelerated to 7.9% year-on-year in March 2026. Month-on-month, prices rose by 1.7%. After the January slowdown to 7.4% and the February acceleration to 7.6%, the March figure confirmed that the disinflationary trend had become less stable.
The NBU explained the March acceleration primarily by the increase in prices for raw food products, fuel and certain services. Additional pressure was created by energy risks, rising business costs, the impact of external energy prices and increasing geopolitical tension. At the same time, core inflation remained closer to the forecast trajectory, which allowed the regulator not to move to a sharp tightening of policy, but at the same time limited the room for a further rapid reduction in the rate.
At the end of March, the NBU key policy rate remained at 15.0%. On March 20, the Board of the National Bank decided to keep it unchanged after the January reduction from 15.5% to 15.0%. The regulator explained this by the need to maintain the attractiveness of hryvnia assets, preserve the stability of the foreign exchange market and control inflation expectations.
“March effectively paused the discussion about rapid monetary policy easing. Inflation accelerated, the foreign exchange market remained tense, and external risks increased. Under such conditions, keeping the rate at 15% was a logical decision. Ukraine cannot afford to stimulate the economy at the cost of losing confidence in the hryvnia. In a wartime economy, the stability of expectations is often more important than a short-term reduction in the cost of credit,” Urakin emphasized.
The foreign exchange sector remained controlled but required significant support from the NBU. As of April 1, 2026, Ukraine’s international reserves amounted to almost $52.0 billion. In March, they decreased by 5.0%. This dynamic was caused by the National Bank’s foreign exchange interventions and the country’s debt payments in foreign currency, which were only partially compensated by inflows from international partners and the placement of foreign currency domestic government bonds.
Despite the decline, reserves remained high by historical standards and continued to serve as the main financial safety cushion. At the same time, the very need for large interventions indicated that the private foreign exchange market continued to have a structural currency deficit. Ukraine imports significantly more than it exports, and therefore exchange rate stability is largely supported by external financing and the NBU’s reserves.
Foreign trade in the first quarter confirmed this problem. According to the State Customs Service, Ukraine’s trade turnover in January-March 2026 amounted to $33.5 billion. Imports reached $23.4 billion, while exports amounted to $10.1 billion. Thus, the goods deficit over three months amounted to about $13.3 billion, and imports were more than twice as high as exports.
In the import structure, machinery, equipment, transport, fuel and energy goods, and chemical industry products played a key role. China, Poland and Turkey remained the largest import trading partners. The export base remained significantly narrower: the main positions were food products, agricultural products, metals and certain machinery products. The main export destinations remained EU countries and Turkey.
“The trade deficit of the first quarter is one of the most important indicators of the vulnerability of the Ukrainian economy. Reserves and external assistance make it possible to pass through this period without a currency crisis, but they do not replace the country’s own export capacity. When imports are more than twice as high as exports, it means that the country is financing a significant part of its needs through external resources. In wartime conditions this is inevitable, but strategically such a model cannot be permanent. Ukraine must increase exports of products with higher added value, develop processing, logistics, energy autonomy and the defense-industrial complex,” Urakin stressed.
The budget situation following the results of the first quarter also remained tense. According to the Ministry of Finance, UAH 734.6 billion was received by the general fund of the state budget in January-March 2026. At the same time, cash expenditures of the general fund for this period amounted to UAH 916.4 billion, which is 7.1% more than in the corresponding period of the previous year. In March, expenditures amounted to UAH 369.1 billion.
Expenditures on security and defense in January-March amounted to UAH 570.9 billion, or 62.3% of all expenditures of the general fund. This confirms that the state budget in 2026 remains primarily a war budget. The largest areas of expenditure included remuneration in the budget sector with accruals, social security, subsidies and transfers to enterprises, payment for goods and services, servicing of public debt and transfers to local budgets.
“The budget of the first quarter of 2026 shows that the state maintains financial manageability, but the price of this manageability is very high. More than 60% of general fund expenditures are directed to security and defense, and this is absolutely understandable in wartime conditions. But such a structure means that the room for classic investment in development is limited. Therefore, international support, the domestic government bond market and the government’s ability to expand its own tax base through the restoration of economic activity remain critically important,” Urakin noted.
Global economy
As of the end of March 2026, the global economy remained resilient, but less predictable than at the beginning of the year. While in January the IMF’s baseline scenario projected global economic growth of 3.3% in 2026, in the April World Economic Outlook the Fund revised its estimates amid new geopolitical tensions in the Middle East. Under the baseline assumption of a limited conflict, the IMF forecast global growth of 3.1% in 2026 and 3.2% in 2027.
The IMF noted that the global economy had once again faced a shock related to war, rising commodity prices, stronger inflation expectations and tighter financial conditions. This meant that the global environment for Ukraine became less favorable: energy prices, risks to trade and the cost of capital again began to play a greater role.
The United States remained one of the main centers of global resilience. In the first quarter of 2026, U.S. real GDP grew by 2.1% year-on-year, according to the BEA estimate. Growth was supported by investment, exports, government spending and consumer spending. At the same time, inflation in the United States accelerated noticeably in March: the consumer price index rose by 3.3% year-on-year after 2.4% in February, while core CPI stood at 2.6%.
The Federal Reserve in March kept the target range for the federal funds rate at 3.5–3.75%. This meant that U.S. monetary policy remained restrictive, while expectations of a rapid rate cut were postponed. For countries with elevated risk, including Ukraine, this meant the preservation of a relatively high cost of global capital.
The eurozone was in a more difficult position. Its economic growth remained weak, while inflation again rose above the ECB’s target. According to Eurostat’s preliminary estimate, annual inflation in the eurozone in March 2026 stood at 2.5%, while the final estimate later showed 2.6%. In February, the figure was 1.9%, meaning that March brought a noticeable acceleration of price pressure. The main factor was energy, while core inflation remained more moderate.
The European Central Bank in March kept key rates unchanged: the deposit rate at 2.0%, the main refinancing operations rate at 2.15%, and the marginal lending facility rate at 2.40%. For Ukraine, the eurozone remains the most important external economic environment due to trade, financial assistance, EU integration, migration flows and logistics corridors. However, the weak growth rate in Europe limits the potential for a rapid increase in Ukrainian exports.
The United Kingdom also entered 2026 with a combination of moderate growth and an elevated inflation background. In March, the British CPI rose to 3.3% year-on-year after 3.0% in February. The Bank of England kept the Bank Rate at 3.75%, reflecting the regulator’s caution in the face of the risk of a new inflation acceleration. For the European region as a whole, this meant that the cycle of rapid monetary easing had not begun.
“The global economy did not enter a recession in the first quarter of 2026, but it became noticeably more nervous. The United States maintains stable growth, but is facing a new inflation acceleration. The eurozone has a weaker economic impulse and again sees inflation above the target. The United Kingdom also remains in a mode of cautious monetary policy. For Ukraine, this means that the external world does not create a catastrophic background, but also does not provide an easy impulse for recovery. Under such conditions, it is impossible to rely only on external demand,” Urakin noted.
The Chinese economy maintained relatively strong dynamics in the first quarter of 2026. According to the National Bureau of Statistics of China, China’s GDP grew by 5.0% year-on-year in Q1, and by 1.3% quarter-on-quarter. Nominal GDP amounted to about 33.4 trillion yuan. At the same time, inflation remained moderate: CPI rose by 1.0% year-on-year in March, and averaged 0.9% in January-March.
China continued to demonstrate a strong manufacturing base and export potential, but structural problems — weaker domestic demand, the real estate market, debt burden and dependence on external markets — remained important constraints. For Ukraine, China remained a key source of imports, primarily machinery, equipment, electronics and industrial goods.
India retained its status as one of the main drivers of global growth. According to the government’s first advance estimate, India’s real GDP in the 2025/26 fiscal year was expected to grow by 7.4%, while nominal GDP was expected to grow by 8.0%. The main driver remained the services sector, as well as domestic demand and public investment. The Indian economy remained one of the most convincing examples of combining high growth with relatively controlled inflation.
Turkey remained an example of an economy with relatively high business activity, but a very difficult inflationary legacy. According to official TurkStat data, in March 2026 consumer prices rose by 1.94% month-on-month and by 30.87% year-on-year. This was lower than in February, when annual inflation was 31.53%, but still remained an extremely high level. At the same time, the Turkish economy grew by 3.6% in 2025, which indicated the preservation of domestic demand despite inflationary risks.
Brazil looked more balanced among large emerging economies. According to IBGE, Brazil’s GDP in 2025 grew by 2.3%, to 12.7 trillion reais at current prices. Growth was observed in the agricultural sector, industry and the services sector. According to the preliminary IPCA-15 indicator, inflation in March 2026 amounted to 0.44% for the month and 3.90% over the last 12 months. This confirmed that Brazil maintained a relatively controlled inflation background, although its economy also felt the impact of high rates and external uncertainty.
“China, India, Turkey and Brazil show different development models of large emerging economies. China maintains scale and manufacturing strength, but has structural imbalances. India demonstrates the highest dynamics among major economies and relies on domestic demand and the services sector. Turkey is growing, but pays for it with high inflation. Brazil is moving more slowly, but more balanced. For Ukraine, it is important to look at these examples practically: in global competition, those countries win that can simultaneously maintain macro-stability, production, exports and domestic investment demand,” Urakin believes.
Conclusions
As of the end of March 2026, Ukraine maintained macrofinancial manageability, but the first quarter demonstrated the fragility of economic stabilization. Real GDP in Q1 decreased by 0.6% year-on-year, inflation accelerated to 7.9% in March, the key policy rate remained at 15.0%, international reserves declined to about $52.0 billion, and the goods deficit in January-March exceeded $13 billion. The budget remained functional, but its structure was fully subordinated to wartime needs: more than 60% of general fund expenditures were directed to security and defense.
The main risks for Ukraine remained wartime losses, destruction of energy infrastructure, weak exports, labor shortages, high budget dependence on external financing and the structural foreign exchange deficit of the private sector. Positive factors included a significant level of international reserves, the NBU’s controlled policy, continued international support, business adaptability and the state’s ability to fulfill key budget obligations.
The global economy in the first quarter of 2026 remained relatively resilient, but less stable than at the beginning of the year. The IMF forecast global growth of 3.1% in 2026, provided that the conflict in the Middle East remained limited. The United States maintained positive dynamics but faced a new inflationary impulse; the eurozone remained weak in terms of growth rates and again saw inflation above the target; China demonstrated 5% growth; India remained the main driver among large economies; Turkey struggled with high inflation; Brazil maintained moderate, more balanced dynamics.
“March 2026 became a moment for Ukraine to test the real strength of its stabilization model. High reserves, international assistance and the NBU’s controlled policy allow the system to be kept in working condition. But the decline in GDP in the first quarter, accelerating inflation and a large trade deficit show that financial stability alone is not enough. The next stage must be the transition from a survival model to a model of productive recovery. This means investment in energy, the defense-industrial complex, processing, logistics, export production, technologies and human capital. Without this, even significant reserves and external assistance will remain only a safety cushion, not a source of long-term development,” Maksym Urakin concluded.
The monthly analytical and statistical product “Economic Monitoring” is available to clients of Interfax-Ukraine.
Head of the “Economic Monitoring” project, PhD in Economics Maksym Urakin
