Issue #2 – March 2025
The purpose of this review is to provide an analysis of the current situation on the Ukrainian currency market and a forecast of the hryvnia exchange rate against key currencies based on the latest data. We analyze current conditions, market dynamics, key influencing factors, and likely scenarios.
Analysis of the current situation on the Ukrainian currency market
In the second half of March, Ukraine’s FX market remained relatively stable, showing predictable local fluctuations in the dollar and a more pronounced, albeit predictable, strengthening of the euro. Both developments were primarily driven by external factors, as the domestic FX market remained balanced due to high cash liquidity and active actions by the NBU.
The NBU’s informal signal to banks to raise deposit rates after the key policy rate hike is a classic soft pressure from the NBU, which is trying to keep hryvnia instruments attractive. One by one, banks raised hryvnia rates, confirming that they understood the NBU’s signals, which should potentially reduce demand for foreign currency from the population and encourage at least short- and medium-term savings in hryvnia, easing pressure on the exchange rate.
International factors affecting the market:
Ø The US Federal Reserve has been pursuing a consistent policy of lowering its key policy rate for several months now, clearly implementing a cycle of easing. This reduces the attractiveness of the dollar as an asset for investors and stimulates the flow of capital into alternative currencies and assets.
Ø In contrast, the European Central Bank gave positive signals about the improvement of the economic situation in the eurozone, which pushed the euro to a significant increase.
Ø The global market witnessed a moderate weakening of the US dollar and a strengthening of the euro, which became the main driver of changes in the exchange rates of key currencies in Ukraine.
Internal factors that influenced the foreign exchange market:
Ø Increased supply of cash foreign currency: according to the NBU, in February 2025, banks imported more than $1.08 billion in cash foreign currency to Ukraine, of which $749 million was in US dollars and $330 million in euros. This is a decrease compared to January ($1.77 billion), but remains high historically, ensuring high foreign exchange liquidity and exchange rate stability.
Ø In the dynamics of currency imports by banks, there is a well-established trend of increasing the share of euros in the total volume. From 13% at the beginning of 2024, the share of euros increased to more than 30% in 2025, reflecting the growing demand for euros among households and businesses.
Ø Deviations of cash exchange rates from the official exchange rate remain insignificant, which indicates that the regulator’s currency policy is effectively coordinated with market realities.
Overview of exchange rate dynamics
US dollar exchange rate
Ø In the second half of March, the dollar exchange rate against the hryvnia remained in the range of UAH 41.30-41.80 per dollar.
Ø The lowest value was recorded around March 13, after which the exchange rate gradually recovered.
Ø The spread between the bid and ask rates narrowed to 30-40 kopiykas compared to 50-60 kopiykas in February, indicating high liquidity and stability of the market.
Ø The deviation of market rates from the official NBU exchange rate remained minimal (± UAH 0.3), which is an indicator of the stability of expectations and the NBU’s predictable policy on the foreign exchange market.
Euro exchange rate
USD exchange rate forecast
Ø In the short term (2-4 weeks), the dollar is likely to remain in the range of UAH 41.25-42.00/$. The main factors will be maintaining high cash liquidity, the US Federal Reserve’s restrained policy, and the NBU’s active presence on the interbank market. Narrowing spreads and stable deviations from the official exchange rate give reason to expect low volatility in this market segment.
Ø In the medium term (2-4 months), demand for foreign currency may moderately increase amid higher budget spending, a pickup in business imports, and the seasonal effect of spring asset regrouping. In this case, the dollar could move up to the range of UAH 41.80-42.50/$.
Ø In the longer term (6+ months), a significant depreciation trend may resume with the potential for a shift toward UAH 45.00/$.
This scenario will be influenced by the general inflationary background in Ukraine, fiscal expectations for the exchange rate (budget target is 45 UAH/$), and risks with financing the state’s needs.
Ø However, the global monetary policy factor will remain restraining: if the US Federal Reserve moves to easing, the pressure on the hryvnia will be offset by global stability or even a weakening of the dollar.
Euro exchange rate forecast
In theshort term (2-4 weeks), the euro may consolidate in the range of 44.80-45.70 UAH/€ after the ultra-fast growth recorded in mid-March.
A correction phase or sideways movement is expected, which is typical for markets after a sharp move.
In the medium term (2-4 months), the euro’s dynamics will depend on the ECB’s decisions on interest rates and incentives, the state of the eurozone economy, and global demand for risky assets. In the baseline scenario, the exchange rate may remain in the range of 44.50-46.00 UAH/€. In the event of new positive signals from the EU, a retest of the 46.50 UAH/EUR level is possible.
In the long-term horizon (6+ months), the euro is more stable than the dollar due to structural market expectations, a gradual increase in its role in savings, and its growing role in foreign trade.
The forecast range is 45.00-46.50 UAH/€ with the potential for appreciation in case of sustained macro growth in the euro area.
Recommendations for businesses and investors
1. Diversification remains the basic strategy in a situation where the euro shows increased volatility and the dollar shows signs of structural weakening.
If you have liabilities in euros, it is advisable to gradually increase the share of this currency, but the dollar should be left as a short-term liquidity or hedge instrument.
2. Monthly review of the structure of foreign currency assets is relevant in the context of the NBU’s flexible currency policy, changes in external demand and potential exchange rate dynamics, especially if some assets are denominated in a currency other than the main operating currency.
3. Cautious currency speculation – only if you have the skills. Despite periods of short-term exchange rate volatility, especially in the euro, the current market is more predictable for experienced players, but carries significant risks for beginners.
Speculative strategies are justified only for those who have the resources and time to constantly monitor the market and have access to quick transactions at favorable rates.
4. The hryvnia should be maintained at its functional level. The current situation does not pose a threat of rapid devaluation, but it is not advisable to keep excess hryvnia liquidity. It should be used only to cover short-term expenses and to form reserves for unforeseen events.
5. For the first time in almost a year of currency market reviews, we can recommend considering short-term hryvnia deposits for 1-4 months, a logical tactic for “temporary parking” of free funds without currency risk in the context of banks raising interest rates to ~15% per annum, which are now at least slightly ahead of official inflation. For the same reasons, a short-term “parking” of free hryvnia in government bonds can be considered. Longer-term hryvnia investments are risky given the likely acceleration of inflation and a possible exchange rate shift in the second half of 2025, which is most likely to occur in the fall of this year. Yields on foreign currency deposits remain symbolic and do not cover the risks of liquidity ties.
6. Maximum liquidity is a top priority: in the face of geopolitical and economic turbulence, all foreign currency assets should be available for operational maneuver.
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 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 of timeliness or updates or additions.
Users of this material should make their own risk assessments and make informed decisions based on their own assessment 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.
Issue No. 1 – March 2025
The purpose of this review is to provide an analysis of the current situation on the Ukrainian currency market and a forecast of the hryvnia exchange rate against key currencies based on the latest data. We analyze current conditions, market dynamics, key influencing factors, and likely scenarios.
Analysis of the current situation
Since the beginning of March, the Ukrainian currency market has undergone significant changes in the dynamics of the dollar and euro. While the dollar was gradually strengthening in February, it began to decline in early March, followed by a gradual recovery after March 10, and the euro, after relative stability, began to grow.
Domestic Ukrainian factors had virtually no impact on this situation, which reflects global processes in the international currency market.
The main international factors that influenced the exchange rate dynamics:
Ø The start and further escalation of tariff wars launched by the administration of the new US president, which pose risks to US economic growth and accelerating inflation. This encouraged global investors to exit the dollar in search of more stable assets.
Ø The dollar is weakening on the global market due to softer statements by the US Federal Reserve. Investors have begun to expect a likely rate cut later this summer, which has weakened support for the dollar.
Ø The European Central Bank (ECB) had previously signaled possible stimulus to support the economy, which led to the euro’s weakness. However, since the beginning of March, EU macroeconomic indicators have improved, pushing the euro to strengthen.
Key internal factors affecting the Ukrainian FX market:
Ø Decreased demand for the dollar after a large-scale import of cash currency in February: according to the NBU, $1.316 billion in cash dollars and the equivalent of $450 million in euros were imported into Ukraine.
Ø The NBU’s interventions help to smooth out exchange rate volatility and maintain a controlled market situation.
Ø Increased budget expenditures in March traditionally create additional demand for foreign currency, which may affect the correction of the hryvnia exchange rate.
Exchange rate dynamics
Ø Since the end of February, the dollar has been accelerating its pronounced downward trend, slipping from the average of UAH 41.42-41.97/$ to UAH 41.1-41.65/$. This downward trend primarily reflects the situation on the global currency market and the lack of domestic drivers for the dollar to hryvnia exchange rate amid decreasing pressure on the national currency and a temporary decline in demand for the dollar. The appreciation observed since March 10 may be only a temporary correction, which generally reflects the temporary volatility of the US currency.
Ø In contrast, the euro hryvnia exchange rate moved in the opposite direction. Since the beginning of March, it has soared from 43.35-44.05 UAH/€ to 44.46-45.15 UAH/€, effectively returning to the level of mid-January this year after a long slump. This behavior of the euro is also entirely due to external factors.
Much more informative for analyzing the state of the Ukrainian foreign exchange market is the dynamics of spreads between buying and selling rates, which are an indicator of market liquidity and allow us to diagnose the level of uncertainty among its key operators.
Ø In March, we saw the average spread for the dollar narrow below February’s levels, from 50-60 kopeks to 40-50 kopeks, and in some cases to 30 kopeks. This indicates a balanced supply and demand for the US currency.
Ø For the euro, the average spread increased from 50-60 kopeks to 70-80 kopeks, as the sharp rise in the euro made the market less predictable, forcing banks and exchange offices to put in higher margins.
Thedeviation of the market rate from the NBU’s official exchange rate remained insignificant, confirming that the regulator’s currency policy is in line with the market balance. However, for the euro, this deviation increased in the second half of March, indicating that the market reacts more quickly to global factors, often outpacing the NBU’s official exchange rate adjustments.
USD exchange rate outlook
Ø In the short term, over the next 2-4 weeks, the dollar is likely to remain in the range of UAH 41.30-42.30 per dollar. The main factor that will influence the situation will be the policy of the National Bank of Ukraine, as well as possible decisions of the US Federal Reserve regarding the discount rate. If the NBU continues to actively intervene in the market through interventions, exchange rate fluctuations will be minimal.
Ø During the spring months, in the medium term (2-4 months), the dollar may move to the range of UAH 41.50-42.50 per dollar. In this period, the demand for foreign currency is expected to increase, in particular due to increased budget spending and import activity by businesses. An additional, though unlikely, risk is possible delays in international financial assistance, which could put temporary pressure on the hryvnia.
Ø In the longer term, i.e., over 6 months, the dollar has the potential for gradual appreciation due to the persistence of key factors of depreciation pressure on the hryvnia. If economic conditions remain unchanged, it may return to the range of UAH 42.50-44.00 per dollar, but we should remember the budget exchange rate target of UAH 45 per dollar, which leaves room for the exchange rate to be used for fiscal purposes to manage budget revenues. At the same time, the US Federal Reserve’s policy may affect global dollar liquidity: if the regulator begins to ease monetary policy, the US currency will remain relatively stable despite the hryvnia’s devaluation.
Euro exchange rate forecast
Ø In the coming weeks, the euro is likely to reach and stabilize in the range of UAH 44.80-45.70 per euro. After a sharp jump, the market may enter a correction phase where there will be no significant fluctuations.
Ø In the medium term, over the next 2-4 months, the dynamics of the euro will largely depend on the policy of the European Central Bank. If the ECB continues its measures to support economic growth, the euro may remain in the range of UAH 44.50-46.00 per euro. At the same time, the euro may weaken somewhat if there are prerequisites for a stronger dollar or if negative economic news from the EU.
Ø In the long run, the euro has the potential for relative stability or moderate growth. If the economic situation in Europe improves, the euro may remain in the range of UAH 45.00-46.50 per euro. However, as in the case of the dollar, macroeconomic factors and risks to the European economy may have a significant impact on the euro’s further dynamics.
Recommendations for businesses and investors
Diversifying your portfolio across currencies and assets is more important than ever: consider your individual needs first. Depending on where and how long before you plan to spend your foreign exchange in euros or dollars, this currency should be the dominant currency in your savings portfolio to avoid conversion losses. Other reserve currencies in your portfolio should act as a stabilizer: when one currency falls, the other rises, compensating for at least part of the exchange rate losses.
Regularly analyze and revise the structure of foreign currency savings: in the current turbulence and poor predictability in international currency markets, you should analyze the appropriateness of the current portfolio structure at least once a month and adjust it if necessary.
Currency speculation: In general, the current situation is quite favorable for cautious speculation, but it will require careful monitoring of key indicators and information signals to respond to changes in market trends in a timely manner. Experienced investors can take advantage of the current opportunities, while inexperienced investors should stick to conservative strategies focused on preserving their savings.
As for the hryvnia, we reiterate our recommendation to hold it only in the amount necessary to finance current expenses, service short-term financial obligations, and for unforeseen expenses in special life situations.
The basic recommendation for all currencies is to keep all savings as liquid as possible, avoiding long-term investments. This will ensure freedom of maneuver in the face of currency turbulence and poor predictability that will accompany us at least in the medium term.
This material was prepared by the company’s analysts and reflects their expert, analytical professional judgment. The information provided 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 of timeliness or updates or additions.
Users of this material should make their own risk assessments and informed decisions based on their own assessment 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.
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.
The official hryvnia exchange rate, after rising by 5 kopecks on Wednesday, dropped by 17 kopecks on Thursday to 40.8823 UAH/$1, a new all-time low.
According to market participants, the exchange rate came close to the level of 41 UAH/$1 near the end of interbank trading.
The reference value of the hryvnia exchange rate set by the National Bank of Ukraine (NBU) at 12:00 on Thursday fell by 16 kopecks to 40.8423 UAH/$1, while on the cash market the dollar rose by 12 kopecks to 41.10 UAH/$1.
A day earlier, the National Bank announced new easing of currency restrictions, in particular, it facilitated servicing of Eurobonds through dividends of guarantors and sureties. In addition, on July 11, the NBU expanded the list of defense goods available for purchase abroad for volunteers and allowed businesses to buy foreign currency to repay loans from international financial institutions (IFIs).
Since the beginning of 2024, the official hryvnia exchange rate has depreciated by 7.6%, or UAH 2.88, and since the NBU switched to managed flexibility on October 3, 2023, it has depreciated by 11.8%, or UAH 4.32.
In June, the official hryvnia exchange rate fell by 3 kopecks to 40.5374 UAH/$1, although in the middle of the month the exchange rate hit a record low of 40.6908 UAH/$1, while in May it fell by 90 kopecks.
The NBU attributed the weakening to increased government spending after receiving external financing in March-April, as well as the impact of the largest package of currency restrictions for businesses since the start of the full-scale war announced on May 3.
The NBU’s net sales of dollars in the first week of July decreased to $630.91 million from $670.41 million in the previous month. In June, it amounted to $2.99 billion compared to $3.07 billion in May.
Earlier, the Center for Economic Strategy (CES) released an updated consensus forecast of seven investment companies and think tanks. According to it, the forecast for the hryvnia exchange rate at the end of this year has been lowered from 40.5 UAH/$1 to about 42 UAH/$1, which generally correlates with the 42.1 UAH/$1 set in the state budget for the end of 2024. The forecast for the average annual exchange rate was also downgraded from 38.7 UAH/$1 to 40.1 UAH/$1, compared to the budgeted level of 40.7 UAH/$1.
The reference exchange rate of the hryvnia to the US dollar on the interbank foreign exchange market as of 12:00 a.m. on March 7, 2024.
Indicator 06.03.2024 07.03.2024 07.03.2024 Change, %.
Reference hryvnia to US dollar (UAH/$) 38.3099 38.1029 -0.54
The International Monetary Fund (IMF) supports the decision of the National Bank of Ukraine to switch from a fixed exchange rate regime to a managed flexibility regime starting October 3, and believes that this will further support the stability of the economy and the foreign exchange market, said Natan Epstein, Deputy Head of the IMF Mission to Ukraine.
“The ability to manage the exchange rate in a way that minimizes fluctuations seemed to us to be an important step forward,” he said at a briefing in Kyiv on Wednesday.
Epstein reminded that as part of the program, the NBU in late June approved a strategy supported by the Fund to normalize its monetary and exchange rate policies, which includes a relaxation of exchange controls, as well as a gradual increase in exchange rate flexibility and, ultimately, a return to the inflation targeting system.
According to the deputy head of the mission, the conditions necessary for abandoning the fixed exchange rate have been met, primarily a decline in inflation, a stronger position of international reserves, and stability in the foreign exchange market.
In general, Epstein noted the trust that the NBU managed to gain in managing monetary and foreign exchange policy during the war.
The IMF representatives also expressed satisfaction with the existing dialog between the NBU and the Ministry of Finance and its results, which do not call into question the independence of the central bank.
