The National Bank of Ukraine (NBU) has strengthened the official hryvnia exchange rate against the U.S. dollar by 17 kopecks on Friday, after the official hryvnia exchange rate was raised by another 7 kopecks at the end of trading on Monday – to 41.5554 UAH/$1, according to the data on the regulator’s website.
The NBU set the reference rate at 41.5959 UAH/$1 at 12:00 p.m. Monday against 41.6644 UAH/$1 on Friday.
“The dollar exchange rate may fluctuate in the range of 41.8-42.5 UAH/$1. The NBU continues to actively restrain sharp fluctuations, as evidenced by the sale of currency from reserves, and large inflationary risks are not expected in the coming month,” analysts at currency exchange market operator KYT Group shared their expectations for the coming weeks in a February review.
However, among the current risks they name further growth of dollar rate in case of change of policy of the Federal Reserve System (FRS), or sharp fluctuations on external markets, as well as the probability of short-term “jumps” of the rate, as a response to any news about the delay of international aid.
Analysts expect a gradual weakening of the hryvnia to 44 UAH/$1 during the first half of the year, which may be due to increased import purchases in the spring, worsening inflation expectations, and as a consequence, an accelerated weakening of the national currency.
Among other factors of such a forecast is a greater demand for currency in Ukraine due to the expected transition of the Federal Reserve System to a softer interest rate policy. Additional risks, according to KYT Group experts, may be the deterioration of the economic situation, or a shortage of financial aid.
“If the current macroeconomic picture persists, the dollar exchange rate may reach UAH 45/$1 before the end of the year, although this scenario depends entirely on the success of the government’s economic policy and the stability and sufficiency of the inflow of external financing,” the analysts summarized.
As reported, the Cabinet of Ministers has set the annual average of the official exchange rate of the hryvnia to the U.S. dollar in the state budget of 2025 at the level of 45 UAH/$1.
In the 2024 budget, the government budgeted an annual average of 40.7 UAH/$1, and at the end of the year – 42.1 UAH/$1. The hryvnia weakened by 10.6%, or by UAH 4.02 to UAH 42.0390/$1 at the official exchange rate last year.
Ukraine’s international reserves as of February 1, 2025, according to preliminary data, amounted to $43 billion 3.1 million, in January they decreased by 1.8%, or $785 million, and net international reserves (NIR) – by $0.79 billion, or 2.7% – to $28.313 billion.
Source: https://interfax.com.ua/news/projects/1047722.html
The National Bank of Ukraine has strengthened the official hryvnia-dollar exchange rate by 1 kopeck after the official hryvnia-dollar exchange rate was raised by 9 kopecks on Wednesday, according to the regulator’s website. – to 42.1729 UAH/$1, according to data on the regulator’s website.
The NBU set the reference rate at 12:00 Thursday at 42.1971 UAH/$1 against 42.2650 UAH/$1 a day earlier.
On the cash market, the dollar exchange rate fell by 21 copecks when buying – to UAH 42.61/$1, and when selling – by 17 copecks. – to UAH 42.70/$1.
In turn, analysts of the currency exchange market operator “KIT Group” for the near future predict the hryvnia exchange rate to remain in the corridor of 42-43 UAH/$1, looking at the stabilization process after a seasonal surge in demand for currency at the end of 2024.
“Low economic and business activity in January will contribute to the stability of the exchange rate on a short horizon. Evidence of this is the spread between the rates of buying and selling of the dollar: it remains relatively stable, which indicates the balance of supply and demand in the foreign exchange market of Ukraine”, – analysts note in the January review-forecast of the situation in the foreign exchange market.
According to their expectations, during the first half of the current 2025 hryvnia is very likely to weaken to 44 UAH/1$, which is fully consistent with the government’s budget forecast for this year.
“Avoidance of exchange rate extremes during the first half of the year will allow the National Bank and the economic block of the government to keep the exchange rate reserve to keep within the projected parameters of the average annual rate of UAH 45/$ according to the results of the current year”, – emphasize the experts of ‘KIT Group’.
At the same time, in their opinion, controlled devaluation may become one of the tools to fill the budget at the expense of duties and other fixed charges in foreign currency, including some excises.
Issue 1 – January 2025
The purpose of this review is to analyze the current situation on the Ukrainian currency market and forecast the hryvnia exchange rate against major currencies based on the latest data. We look at the current conditions, key influencing factors, and likely scenarios.
Analysis of the current situation
At the beginning of 2025, the Ukrainian currency market is showing relative stability after the seasonal fluctuations that characterized the end of the previous year. The National Bank of Ukraine (NBU) continues to actively support the market with verbal and resource interventions, without exposing its reserves to significant risks. This helps to avoid sharp exchange rate fluctuations and maintains the confidence of economic entities in the predictability of the national currency.
At the same time, high inflation and devaluation expectations among households and businesses may stimulate increased demand for foreign currency. This may become an additional and more significant factor of pressure on the hryvnia. According to UNB surveys, businesses expect moderate inflation and exchange rate growth, which affects investment and development decisions, as well as planning prices for goods and services, which may exceed the current exchange rate during the year and have a negative inflationary impact, spinning up the devaluation flywheel of negative expectations.
Dollar exchange rate forecasts
Short-term outlook
In the short term, the hryvnia exchange rate is expected to remain in the range of 42-43 UAH/$, given the stabilization of the currency after the seasonal increase in demand for it at the end of last year. Low economic and business activity in January will help keep the exchange rate stable in the short term. This is evidenced by the spread between the buying and selling rates of the US dollar: it remains relatively stable, indicating that supply and demand in the Ukrainian foreign exchange market are balanced.
Medium-term outlook
In the first half of 2025, the hryvnia exchange rate is likely to gradually approach 44 UAH/$, which is fully in line with the government’s budget forecast for 2025. Avoidance of extreme exchange rate fluctuations in the first half of the year will allow the NBU and the government’s economic bloc to maintain foreign exchange reserves to keep the hryvnia within the expected parameters of an average annual exchange rate of 45 UAH/$. Controlled devaluation may become one of the tools to fill the budget at the expense of tariffs and other fees fixed in foreign currency, including some excise taxes.
Euro exchange rate forecast
Short-term forecast
The euro continues to depreciate against the hryvnia, reaching the levels of UAH 43.25-44.15/€. Despite the downward trend in the euro, the spread between the buy and sell rates remains relatively stable, which also indicates that the market is balanced. In the short term, the euro is expected to remain within this range with further movement to UAH 43-44/€, taking into account current trends in international markets and domestic economic factors.
Medium-term forecast
In the coming months, the euro may experience significant fluctuations, which may be due to possible “exchange rate wars” between the US and the EU, as indicated by representatives of the future administration of US President-elect Donald Trump. They claim that a change in the dollar’s parity with the euro is one of the sources of strengthening the American economy.
These verbal interventions, if transformed into real actions, may cause turbulence in the international currency market, which will naturally affect the exchange rates of major world currencies in Ukraine.
Key factors affecting the foreign exchange market
Foreign economic factors. Possible “currency wars” between the US and the EU, as reported by international economic media, may affect global currency markets and, accordingly, the hryvnia exchange rate against major currencies.
2. Inflation and devaluation expectations. High expectations of households and businesses stimulate demand for foreign currency, putting additional pressure on the hryvnia. According to UNB surveys, businesses expect moderate inflation and exchange rate growth.
3. Monetary policy of the NBU. The NBU will continue its policy of controlled flexibility of the exchange rate and will intervene to contain sharp fluctuations.
4. Tax changes. Increase in tax rates on deposit income may stimulate demand for cash, which will put additional pressure on the hryvnia exchange rate.
5. Business climate. Reports of massive business closures due to an increase in the tax burden should not be viewed as a clear symptom of a decline in business activity, as this may only be a sign of business shadowing, which could become an additional driver of demand for foreign currency.
Recommendations for companies and investors
Short-term strategies: focus on maintaining liquidity. Use foreign currency deposits or short-term bonds to preserve capital. The period of increased volatility is an ideal time for experienced investors, while inexperienced investors should avoid risky investments.
Medium-term strategies: build a balanced currency portfolio with a predominance of the US dollar, given its stability in the international economy. If you have economic ties with the eurozone countries, their currencies are becoming increasingly attractive for gradual replenishment of savings. The currencies of EU member states can be a temporary refuge for savings in times of turbulence on international markets. Risk-averse investors should focus on fixed income instruments.
Long-term strategies: Protect your savings from devaluation risks by keeping most of your capital in hard currency or by looking for stable sources of income over the long term. Consider diversifying into safe havens and alternative assets such as gold or cryptocurrencies.
Risk management: This factor comes to the fore. Constantly monitor tax and regulatory changes, which are becoming a key risk factor in the field of legal financial transactions and banking. Avoid excessive accumulation of short- and medium-term assets in hryvnia. Consider geographical diversification of assets and operations in more regulatory stable jurisdictions.
This material was prepared by the company’s analysts and reflects their professional and analytical judgment. The information provided in this review is for informational purposes only and should not be considered a recommendation for action.
The company and its analysts make no representations and assume no responsibility for any consequences that may arise from the use of this information. All information is provided “as is” without any other warranty of completeness, timeliness or obligation to update or supplement it.
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 believe to be sufficiently qualified. We recommend that you consult an independent financial advisor before making any investment decision.
REFERENCE
KYT Group is an international multiservice 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 foreign exchange operations. KYT Group is one of the largest players in this segment of the Ukrainian financial market, is among the largest depositors and is one of the industry leaders in terms of asset and capital growth.
More than 90 branches in 16 largest cities of Ukraine are located in convenient locations and equipped with modern equipment, which ensures 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, has a branch in Poland and plans cross-border expansion to European countries.
The National Bank of Ukraine (NBU), after depreciating the official hryvnia exchange rate by 12 kopecks on Monday, lowered it by another 7 kopecks on Tuesday to 41.5035 UAH/$1, according to the regulator’s website.
“Ukraine’s currency market remains under pressure from psychological factors, although the fundamental macroeconomic indicators do not yet give grounds for strong devaluation pressure and abrupt changes in exchange rates,” KIT Group analysts state in their currency market forecast.
At the same time, they expect a smooth devaluation of the hryvnia in the future. In particular, according to KIT Group’s forecast, the official exchange rate of the national currency to the US dollar will remain in the range of 41-42 UAH/$1 by the end of November, provided that the current state of the macroeconomy and security situation remains unchanged.
By the end of this year, analysts predict the hryvnia will weaken to 43 UAH/$1, which, according to them, may be due to seasonal demand for foreign currency.
The National Bank set the reference exchange rate at 12:00 p.m. today at 41.4815 UAH/$1, compared to 41.4087 UAH/$1 a day earlier.
The US dollar on the cash market on Tuesday rose by 8 kopecks, both when buying and selling, to 41.68 UAH/$1 and 41.75 UAH/$1, respectively.
Since the beginning of 2024, the dollar has risen by 9.2%, or UAH 3.50, at the official exchange rate, and by 13.5%, or UAH 4.93, since the National Bank switched to managed flexibility on October 3, 2023.
The average annual rate of 45 UAH/$1 included in the state budget for 2025 is considered realistic by KIT Group analysts, who note that it implies exchange rate fluctuations in the range of 44-46 UAH/$1.
Ukraine’s international reserves in October, according to preliminary estimates of the NBU, decreased by 6%, or $2.32 billion, to $36 billion 578 million, while net international reserves (NIR) decreased by $3.11 billion, or 12.2%, to $22 billion 437 million.
