Business news from Ukraine

The end of May 2025 is characterized by moderate stability on the Ukrainian currency market in the absence of shock changes despite external turbulence and a complex geopolitical background.

The national currency maintains a controlled exchange rate against the US dollar, while the euro/hryvnia pair continues to show increased volatility, which is associated with both global trends and internal structural shifts in the currency preferences of businesses and the population.

In May, the dollar exchange rate remained within the expected range, showing no significant fluctuations. This was due to stable demand for currency in Ukraine, moderate activity on the interbank market, and the restraining effect of the NBU’s significant reserves. There were no acute shortages or surges in current or speculative demand on the market.

The situation with the euro was somewhat contrasting: in the second half of May, the EU currency showed a correction after reaching its peak at the end of April. At the same time, the spread between buying and selling remained higher than for the dollar, indicating that market operators’ expectations of potential fluctuations remain unchanged.

Global context

The key external drivers remain the monetary policy of the world’s leading economies and the overall level of investor sentiment.

The US Federal Reserve has kept interest rates unchanged, citing the need for more macroeconomic data. This not only signals a cautious approach, but also demonstrates the Fed’s independence from political pressure from the new administration. These two factors are holding back the dollar’s recovery, but are not contributing to its further decline.

Europe has clearly stated its ambition to make the euro an alternative to the dollar: European Central Bank President Christine Lagarde said that the euro could become a viable alternative to the US dollar as the global standard currency for international trade. She noted that the unpredictable economic policy of the US has forced global investors to limit their appetite for the dollar in recent months, but to achieve the ambitious goal of the EU and its members, they must strengthen their financial and security architecture.

Overall, the temporary fragile balance and the absence of significant changes within the previously established trends led to a decline in the euro’s “exchange rate premium” against the hryvnia, which the euro had gained in the first quarter.

Domestic context

The National Bank continues its policy of cautious currency liberalization: in May, it allowed and increased limits on a number of new transactions for banks and businesses. This not only demonstrates the stability of the currency market, but may also serve as an additional signal to foreign investors about the gradual easing of restrictions on cross-border capital movements.

At the same time, the effectiveness of such steps will be measured not only by the volume of repatriated profits, but also by whether investors perceive this as Ukraine’s readiness to return to a model of long-term capital investment even in the face of military risk.

The likely inflow of investment could offset the next risk, which remains the biggest source of uncertainty: the amount of external support in 2026. This year, Ukraine is expected to receive the equivalent of about $60 billion in international aid, an amount that ensures the stability of the economy, the currency market, and the budget. At the same time, only $15 billion in external financing has been secured for next year, which poses a serious challenge to exchange rate stability starting in late 2025. If international partners and allies do not take on broader commitments, this could put additional pressure on the hryvnia in forecasts and the formation of devaluation expectations and, as a result, in the actual behavior of currency market participants.

Overall, May confirms that there is no panic on the currency market, but a regime of heightened caution remains in place.

US dollar exchange rate: dynamics and analysis

In the second half of May, the dollar exchange rate against the hryvnia showed a steady downward trend with a gradual decline in all three key indicators: the buying rate, the selling rate, and the official NBU rate.

After reaching a local peak at the end of April (average selling rate in banks — 41.96 UAH/USD, buying rate — 41.32 UAH/USD), the dollar began to lose ground. From mid-May to the end of May, the cash selling rate fell to 41.74 UAH/USD, the buying rate to 41.17 UAH/USD, and the official NBU rate to 41.5 UAH/USD. All these movements took place without sharp fluctuations, within controlled volatility and in line with global trends.

Key factors behind the decline in the exchange rate:

• Strengthening of the hryvnia amid an influx of tax payments — the approaching tax payment period traditionally increases the supply of currency on the market.
• Low public demand for currency — a trend that has persisted since early spring.
• Growth in NBU reserves to a record $46.7 billion — creates at least short-term confidence in the hryvnia and increases market participants’ confidence in the National Bank’s ability to keep the exchange rate within the forecast range.
• The absence of new external pressure on the dollar — all factors and expectations regarding it are already playing their role in both the current exchange rate and its trajectory. Until the situation changes, a long-term trend toward a weaker dollar can be expected.

Forecast:

• Short term (2–4 weeks): the dollar-hryvnia exchange rate will remain in the range of 41.20–41.80 UAH/USD with moderate volatility of up to ±20 kopecks. The approaching budget dates and possible situational interventions by the NBU may push the exchange rate towards the lower limit for a short time.
• Medium term (2–4 months): likely return to the range of 41.80–42.50 UAH/USD, provided that imports grow, domestic inflation rises, or significant signals regarding external financing are received.
• Long term (6+ months): the risk of a gradual devaluation of the hryvnia remains, primarily due to uncertainty about the amount of financial support in 2026. If current expectations of aid cuts materialize, the market will begin to factor these risks into expectations, which could lead to a gradual move towards 43.00–45.00 UAH/USD or even higher — the average annual budget forecast for the dollar exchange rate still leaves room for it to reach levels significantly higher than 45.00 UAH/USD.

Euro exchange rate: dynamics and analysis

Throughout May 2025, the euro-hryvnia exchange rate showed noticeable wave-like dynamics. From the end of April to the third decade of the month, there was a gradual decline from over 47.90 UAH (sale) to a local minimum of around 46.20 UAH (purchase) and 46.90 UAH (sale) on May 20–21. In the last working week of the month, the euro returned to growth, confirming the volatile nature of the EUR/UAH pair.

Main factors:

• The euro was under pressure amid a correction after prolonged growth, in particular due to a temporary decline in demand for cash and stabilization of the situation on international markets.
• At the same time, the NBU’s technical revaluation of the euro is gradually catching up, with the official rate and market values converging.
• Throughout May, the spread between the buying and selling rates of the euro in banks gradually narrowed: from UAH 1.20 in the first ten days to 60–80 kopecks in the third ten days. This indicates a decrease in exchange rate volatility and stabilization of expectations regarding the short-term outlook for the euro. The period of frenetic premium collection by currency market operators is now over.
• The deviation of market quotations from the official NBU exchange rate at the end of May was 30–40 kopecks, which is a sign of a return to synchronization between the official exchange rate and the real market. A change in these parameters will be a clear signal of the further trajectory of the EUR/UAH exchange rate under the influence of internal factors of the Ukrainian market, as well as external factors — in the EU, moderately optimistic expectations for the recovery of industrial production remain, which also creates an additional foundation for the stability of the EU currency.

Forecast:

• Short term (2–4 weeks): a smooth strengthening of the euro to the range of 47.50–48.00 UAH is likely, provided there are no fundamental changes in the economic and news background.
• Medium term (2–4 months): a movement to 48.50–49.30 UAH/EUR is possible amid stable demand for the euro in Ukraine and growth in the volume of imports and business transactions denominated in euros.
• Long term (6+ months): the euro retains a strategic advantage over the dollar in the context of the gradual diversification of the currency portfolios of Ukrainians and local businesses and the global reorientation of the market. If global geopolitical tensions persist, the consolidation of the euro may accelerate. However, volatility remains a significant risk, so we are still refraining from publishing a long-term forecast for the euro.

Recommendations for businesses and investors

In the second half of May, Ukraine’s currency market has been stable in the dollar segment and the euro/hryvnia pair has returned to calm after a period of peak volatility. At the same time, fundamental devaluation risks remain relevant. In these conditions, currency asset management requires maximum adaptability.

1. Liquidity is an absolute priority.

All currency assets must be readily available: term deposits, long bonds, or currency in instruments without early withdrawal rights are sources of risk. Preference should be given to instruments with flexible management.

2. Dollar/euro shares should be reviewed, but not aggressively increased.

Ø The euro has emerged from its peak growth phase and is stabilizing in a higher range. Now is not the time for active entry, but there is an opportunity to selectively reformat shares in the currency portfolio. New purchases should be made when spreads narrow.

Ø The dollar exchange rate is in a downward trend, and a decline to 41.00 UAH/USD is not an exception but a scenario. However, the risks for the hryvnia are growing. If there is no urgent need for hryvnia, hold on to your dollars. It will show growth in the fall or closer to the end of the year if the fundamental factors of devaluation pressure on the hryvnia are not eliminated, which is highly unlikely.

3. Spreads are the main indicator on the euro market.

Unlike the dollar, where the market is already balanced, in the EUR/UAH pair, it is the dynamics of the spread (buying and selling and deviation from the NBU exchange rate) that demonstrate a change in expectations and signal the likelihood of further movement. A narrowing is a signal to act, while a widening is a signal to pause.

4. A flexible, multi-scenario strategy instead of fixed benchmarks.

Uncertainty about the amount of international aid in 2026 is the main long-term risk.

Follow the news with a cool head — ignore emotions and focus on facts, while developing strategies based on several different exchange rate scenarios (pessimistic, baseline, optimistic) and testing the asset structure in each of them.

5. Short-term speculation — only with precise timing.

In the EUR/UAH pair, the potential margin is still limited and the risk is high. If you do not have quick tools and access to “entry” positions with a minimal market premium, it is better to hold off.

6. Do not weaken control over the hryvnia’s share.

The hryvnia remains stable, but the accumulation of excessive hryvnia mass is undesirable. Keep only operational liquidity, and hold the rest in hedged or conservative currency instruments.

7. Currency liberalization is a signal, not an invitation to act.

The easing of currency restrictions is positive news for investors, but its effect will only be felt in the middle or at the end of the year. Consider this factor as a prospect, not as a justification for immediate action.

This material has been prepared by the company’s analysts 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 responsibility for any consequences arising from the use of this information.

All information is provided “as is,” without any additional guarantees of completeness, timeliness, or updates or additions. Users of this material should independently assess the risks and make informed decisions based on their own assessment and analysis of the situation from various available sources that they themselves consider sufficiently qualified.

Before making any investment decisions, we recommend consulting with an independent financial advisor.

REFERENCE

KYT Group is an international multi-service FinTech company that has been successfully operating in the non-bank 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 included in the list of the largest taxpayers, and is one of the industry leaders in terms of asset growth and equity capital.

More than 90 branches in 16 major cities of Ukraine are located in convenient locations for customers and are equipped with modern equipment for the convenience, security, and confidentiality of each transaction.

The company’s activities comply with the regulatory requirements of the National Bank of Ukraine. KYТ Group adheres to EU standards of operation, with branches in Poland and plans for cross-border expansion into other 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.