Issue No. 2 – March 2026
The purpose of this review is to provide an analysis of the current situation in Ukraine’s foreign exchange market and a forecast of the hryvnia exchange rate against key currencies based on current data. We examine current conditions, market dynamics, key influencing factors, and likely scenarios for future developments.
Analysis of the Current Situation in the Foreign Exchange Market
In the second half of March, Ukraine’s foreign exchange market remained in a state of heightened volatility. Although the exchange rate returned to a level below 44 UAH per dollar, this occurred solely due to the intervention of the National Bank of Ukraine, which actively entered the market with interventions.
At the end of March, the exchange rate trajectory is influenced by several key factors. In the domestic market, these factors include, on the one hand, the cost of petroleum products, which continues to rise, and growing demand for currency in both the interbank and cash markets. In the foreign market, the greatest influence comes from the war between Israel and the U.S. against Iran, which is driving continued growth in oil prices; however, investor skepticism regarding a swift end to the war has already peaked, and the dollar is now regaining lost ground—the U.S. currency’s exchange rate against the euro is strengthening.
Global Context
At the end of March, the dollar is strengthening against the euro, and the DXY index shows that the US currency has appreciated by 2.23% over the past month.
At its March meeting, the Federal Reserve Committee left the benchmark rate unchanged in the range of 3.5% to 3.75%. This was the second consecutive meeting where the decision was made to keep rates unchanged. The published Summary of Economic Projections (SEP) showed that the median forecast for interest rates anticipates only one cut of 25 basis points by the end of this year, followed by another cut in 2027. Federal Reserve Chair Jerome Powell is confident that a decline in inflation is already evident in the U.S. “Essentially, the forecast is that we will see some progress on inflation—not as significant as we had hoped, but some progress on inflation,” Powell said. However, the situation regarding the labor market is less optimistic, although Powell noted that the unemployment rate remains relatively low at 4.4%, but added that job creation has slowed to a complete halt. “In fact, there is no net job creation in the private sector,” the Fed chair remarked. Analysts are expressing concerns that the U.S. labor market is experiencing a hiring recession.
Overall, external factors—particularly geopolitical tensions in the Middle East—are currently leading to uncertainty, and the Fed itself is also pointing to risks associated with volatility in the Strait of Hormuz, the world’s most critical oil shipping route. Oil prices are rising as hopes for de-escalation of the conflict with Iran fade. Brent crude futures rose to $110 per barrel after Tehran denied reports of direct talks with the administration of U.S. President Donald Trump. In March, amid the conflict in the Middle East, Brent crude rose from $76 per barrel to over $110 per barrel, while the Strait of Hormuz remains effectively blocked by Iran.
The EUR/USD pair is reacting to geopolitical tensions in March, while the U.S. dollar is strengthening amid rising demand for safe-haven assets and escalating tensions in the Middle East. Additionally, the dollar is supported by rising oil prices, which are fueling fears of rising inflation and influencing the Federal Reserve’s rather hawkish stance. In early March, the exchange rate stood at 1.1766, and the last week ended at 1.1520. It appears that investors do not believe in a quick resolution of the conflict with Iran and are therefore turning to the dollar as a safe-haven asset. Since the U.S., unlike Europe, Japan, and the UK, is a net exporter of energy resources, the dollar’s position is strengthening—the currency has shown its strongest performance in foreign exchange markets since the start of the war between Israel and Iran.
Domestic Ukrainian Context
In March, demand on the Ukrainian currency market rose significantly in both the non-cash and cash segments. Due to the escalation in the Middle East and as a result of regular attacks by the Russian Armed Forces on infrastructure, fuel prices are rising sharply, motivating companies to plan for larger procurement volumes. Since Ukraine is almost entirely dependent on the external market for petroleum products, foreign suppliers are issuing updated price lists, which fuels demand for fuel and, consequently, demand for foreign currency. Meanwhile, the Ukrainian population finds itself in a situation of high uncertainty, as the war, the threat of rising prices due to expensive fuel, and expectations of devaluation are triggering a surge in demand for dollars. According to NBU data, between March 2 and 24, the population purchased over $1.9 billion, while currency sales during this period amounted to $1.1 billion.
In March, the NBU conducted several operations to exchange banks’ non-cash foreign currency for cash to replenish their reserves. On March 25 alone, the exchange, at the request of one bank, amounted to $50 million and €10 million. According to the NBU, overall, between March 9 and 25, 2026, the currency supply announced within the framework of these operations significantly exceeded actual demand from banks, and there is no shortage of cash currency.
On the interbank foreign exchange market, a surge in demand was very noticeable in mid-March, but the National Bank reacted fairly quickly and began increasing its interventions. The currency shortage on the interbank market was eliminated, although the regulator had to significantly increase the volume of interventions to achieve this. According to available NBU statistics, between March 2 and March 20 inclusive, the regulator sold over $3.15 billion on the market. For comparison: for the entire month of February, the volume of interventions amounted to $2.99 billion.
Regarding international financial assistance and loan programs, March was marked by discussions surrounding the upcoming $8.1 billion program with the IMF. The International Monetary Fund expressed concern about Ukraine’s continued receipt of assistance under this package due to the parliament’s delay in passing the laws necessary to unlock the funding. The government has already submitted a new tax bill, which the Verkhovna Rada is expected to consider in the near future. The new taxes are expected to generate 60 billion UAH in additional revenue per year.
U.S. Dollar Exchange Rate: Trends and Analysis
In March, the exchange rate fluctuated significantly. While the official rate stood at 43.2 UAH per dollar at the beginning of the month and reached 44.14 UAH/USD in mid-March, it stood at 43.84 UAH/USD as of March 30.
The interbank market in mid-March was under pressure from high demand for foreign currency, which was successfully “mitigated” thanks to the National Bank’s systematic market interventions. The interbank rate in early March was around 43.21 UAH/USD, and by the end of March, trading had shifted to the 43.84–43.96 UAH/USD range.
The cash market in March moved toward devaluation fluctuations, although some stabilization of the situation on the interbank market and additional actions by the NBU to bolster banks’ cash reserves with foreign currency to some extent restrained the exchange rate trajectory. The buying rate reached peak values of 43.80–44.10 UAH/USD in mid-March, but by the end of the month the hryvnia strengthened, and the buying rate remained within the range of 43.40–43.70 UAH/USD. Meanwhile, the selling rate at the end of March stood at 44.0–44.20 UAH/USD. The spread between buying and selling rates in the cash market in March widened to 0.45–0.60 UAH/USD. This signals high unpredictability and exchange rate risks, which currency sellers factor into their rates daily as they analyze demand and anticipate further waves of devaluation.
Key influencing factors
· Significant growth in demand for foreign currency on the interbank market: companies are increasing their currency purchases in light of the situation on the petroleum products market and rising oil prices.
· Increase in the NBU’s currency interventions: The National Bank is stabilizing the market through interventions, preventing the exchange rate from reaching the peaks observed in mid-March. The NBU is also conducting currency swaps at banks’ request to replenish cash reserves with dollars and euros.
· International factors: The dollar is regaining lost ground in the global market due to investor sentiment; against the backdrop of escalation in the Middle East, investors view the dollar as a safe haven.
· Market behavioral expectations: In the domestic market, the dollar remains a stable, liquid asset for which demand is growing due to high uncertainty in the fuel market and the risk of further hryvnia devaluation.
Forecast
· Short term (1–2 weeks): base range of 43.95–44.25 UAH/USD, likely gravitating toward the upper limit.
· Medium term (2–3 months): 44.35–45.10 UAH/USD. On the international market, the dollar’s strengthening will be influenced by the Fed’s stance on maintaining the base rate for an extended period and investors’ confidence in the liquidity of the U.S. currency and the positive outlook for the U.S. economy. The war in the Middle East is causing oil prices to fluctuate, which has a negative impact on the euro, causing it to depreciate.
· Long-term (6+ months): the base scenario is a devaluation of the hryvnia to 44.6–45.6 UAH/USD. Several key factors will put pressure on the hryvnia, including the situation on the front lines in Ukraine, oil prices, interbank demand, the timing of EU financial aid to Ukraine, and the approval of a new $8.1 billion program with the IMF.
Euro exchange rate: dynamics and analysis
In March, the euro-to-hryvnia exchange rate declined due to the global trend of the US dollar strengthening, which was also reflected in the euro exchange rate in Ukraine. While March began with an official euro exchange rate of 51.02 UAH/EUR, by mid-month the rate reached 50.95 UAH/EUR, and by the end of March, the exchange rate stood at 50.61 UAH/EUR.
The cash market in Ukraine saw increased demand for the euro, as expectations of devaluation and the rather chaotic situation in the fuel market prompted citizens to increase their cash reserves. At currency exchange offices and bank teller windows, the exchange rate fluctuated as follows: in early March, the buying rate was 50.3–50.7 UAH/EUR, and the selling rate was 51.3–51.4 UAH/EUR; by the end of March, the buying rate had dropped slightly to 50.05–50.7 UAH/EUR. The strengthening of the hryvnia on the interbank market in the second half of March was also reflected in the selling rate for cash euros—the rate reached 50.9–51.4 UAH/EUR.
Thanks to the gradual decline in the public’s panic-driven demand for foreign currency in the second half of March, the spread between the buying and selling rates narrowed to 0.4–0.65 UAH/EUR. This trend was driven not only by a decline in demand for cash currency but also by the NBU’s systematic efforts to replenish banks’ cash reserves with US dollars and euros.
Key influencing factors
· The euro’s trajectory on the international market is trending downward: the euro-to-dollar exchange rate fell to 1.1520 at the end of March, which had a significant impact on the euro’s exchange rate movements in Ukraine’s domestic market.
· The euro is under pressure from the conflict in the Middle East: the eurozone is a net importer of energy, so higher oil prices can negatively affect prices in the EU and sustain high inflation.
· High demand for cash euros in Ukraine: Over the course of the month, the public bought both dollars and euros from banks and exchange offices, driven by the situation in the fuel market and general devaluation sentiment.
Forecast
· Short term (2–4 weeks): if the dollar continues to strengthen on the global market, the euro may remain within the 50.70–51.70 UAH/€ range on the Ukrainian market.
· Medium term (2–4 months): the euro may appreciate to 52.8 UAH/€. The euro’s strengthening will accelerate if tensions in the Middle East de-escalate and oil prices fall.
· Long term (6+ months): if the geopolitical landscape gradually stabilizes and the Fed proceeds with another cut in the benchmark rate, the exchange rate may settle within the range of 53.50–53.90 UAH/€.
Recommendations for businesses and investors
April will not bring full stabilization of the geopolitical environment, and therefore, exchange rate trajectories will depend on the Iran-Israel conflict and further developments in the oil market. Investors should be cautious and avoid impulsive financial decisions.
Focus on oil prices. High oil prices will put pressure on the euro, which will effectively strengthen the dollar’s position in the global market, but at the same time, it will be a favorable period for Ukraine to adopt the euro amid a temporary stabilization of its exchange rate.
Pay attention to statements by Fed Chair Jerome Powell and members of the Federal Open Market Committee. A pause in the pace of interest rate cuts will give the dollar more opportunities to strengthen.
Diversification is the key to successful investing. In times of heightened volatility, it is advisable to avoid high-risk assets and focus on core instruments and safe-haven currencies.
Cautious and thoughtful allocation of currency assets. Global turbulence is driving investors toward safe havens, including the dollar, the Swiss franc, and gold.
The euro can be a part of, but not the center of, a currency strategy. While the world is focused on the stable dollar, Ukraine offers favorable conditions for investing in the euro; however, investors should not dive headfirst into these assets but rather use them as part of their long-term currency strategy. Investors should allocate approximately 25–35% of their portfolio to the euro.
Abandoning the dollar would be a mistake. The strengthening of the dollar allows for confident planning of investments in dollar-denominated assets. Against the backdrop of the hryvnia’s devaluation, the dollar is steadily improving its position and promises investors good returns.
Increased demand for currency is no reason to stop buying. Periodic exchange rate spikes and frenzy in the currency market can only indicate the domestic market’s dependence on external factors. One should be cautious about buying at peak levels, as March’s experience shows that a peak in the dollar’s exchange rate may well be followed by a pullback, during which buying becomes more profitable.
Keep a close eye on the spreads between the buy and sell rates. Narrowing spreads will signal a decline in demand and a temporary stabilization of exchange rate fluctuations, presenting a good opportunity to buy currency.
Times of high uncertainty are ideal for developing new strategies. However, revising your currency plan should not be based on risky models. It is better to move slowly but profitably than to make sudden moves with losses.
The hryvnia is becoming the least attractive currency for investment. Devaluation fears are intensifying, and exchange rate benchmarks are heading toward a level above 44 UAH/USD; therefore, holding significant amounts of hryvnia is a risky strategy. It is better to redirect available funds into dollars and euros.
What’s important in the news. We analyze messages from the U.S. as well as statements from Tehran. Rapid changes in the geopolitical environment can just as quickly affect exchange rate fluctuations of the world’s major liquid currencies. In the domestic market, the main focus should be on the fuel market, as well as the NBU’s participation in interbank market trading.
This material was prepared by analysts at KYT Group, an international multi-service product 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 themselves deem sufficiently qualified. Before making any investment decisions, we recommend consulting with an independent financial advisor.
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