The share of households’ exchange transactions with the US dollar ($) decreased to 74.1% last year from 78.7% in 2023, while for the euro (EUR), Polish zloty (PLN) and British pound (£) – increased, according to an analysis by analysts at currency exchange market operator KYT Group, based on data from 100 branches in 30 of Ukraine’s largest population centers.
“Despite everything the US dollar remains the dominant currency of operations, but its share has decreased, which may indicate the strengthening of the role of the euro and other currencies in the foreign exchange market,” – commented the received data analysts of ‘KYT Group’ in the currency review.
But the share of transactions with the euro has grown from 20.8% in 2023 to 25.15% in 2024. According to analysts, such dynamics may be a consequence of the large emigration of economically active Ukrainians to the eurozone countries, more lively foreign trade with the EU countries, changes in payment preferences of business, or diversification of savings of the population.
According to the above data, the number of transactions with the Polish zloty increased more than one and a half times last year: up to 0.56% from 0.36% in 2023, which KYT experts attribute to the activity of labor migrants, deepening business ties between the countries and, accordingly, the growth of financial flows between Ukraine and Poland.
The share of exchange transactions with the British pound in 2024 has almost doubled: up to 0.15% from 0.08% in 2023. Analysts believe that such a “jump” of the indicator, despite maintaining a low overall share in the section of cash transactions, may indicate the expansion of economic ties between Ukraine and the UK, an increase in cross-border transactions and strong confidence in British financial instruments.
“The decreasing share of the dollar in foreign exchange transactions does not mean its loss of its status as a key reserve currency in Ukraine. High liquidity of the dollar, stability and its global status continue to make it the main instrument for capital preservation”, – note analysts of ‘KYT’, they assume that the current changes may be a consequence of attempts of business and population to diversify currency assets.
“It is especially relevant against the background of changes in the monetary policy of the United States and the European Central Bank. If the ECB continues its easing policy, the hryvnia’s exchange rate against the euro may be more stable than against the dollar,” they point out.
In this context, the experts also reminded about the announced by the National Bank of Ukraine (NBU) possible change of the peg of the official exchange rate of the hryvnia to the euro, instead of the dollar, as part of the aspiration to join the eurozone in the future.
“The financial behavior and currency preferences of Ukrainians are changing in line with external economic conditions. If the trend continues, the euro may continue to build its share of the cash market, while the zloty will remain an important currency for private and business transactions,” the analysts summarized.
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