Issue No. 1 – August 2026
Analysis of the Current Situation in Ukraine’s Foreign Exchange Market
In the first half of August, the dollar exchange rate in Ukraine was influenced by the National Bank of Ukraine’s flexible exchange rate strategy, which involves participating in trading on the interbank foreign exchange market through foreign currency interventions. As a result, the exchange rate—which had been attempting to break through the 44.83 UAH/USD mark—returned to the level seen at the beginning of the month—44.70 UAH/USD—by the end of the second week of August. The cost of this exchange rate stability was $2.11 billion, which the NBU sold to importers through foreign exchange interventions in the first half of August. This is nearly equivalent to the amount of foreign currency sold by the NBU during the last two weeks of July ($2.15 billion). Demand for foreign currency in August remains high, and the NBU is the market’s primary market maker. There is absolute stability in this regard. Thanks to the National Bank’s active participation in trading, the exchange rate remains virtually unchanged.
One of the main problems affecting the country’s economy and foreign exchange earnings is the difficult situation regarding the transport of Ukrainian goods by sea. In July and early August, Russia carried out more than 70 attacks on Ukraine’s port infrastructure and 62 strikes on ships. This effectively halted agricultural exports, which fell by 75% year-over-year in the first two weeks of August. In the long term, the halt in agricultural exports threatens to lead to a buildup of grain in warehouses, as well as multimillion losses for agricultural companies. However, this is unlikely to affect exchange rate fluctuations, as the National Bank continues to keep the situation fully under control.
Global Context
Global capital markets are awaiting the September meeting of the Federal Reserve Committee, where a decision to change the benchmark interest rate could be made on September 16. However, there is currently no certainty regarding this. Analysts even predict that the Fed may leave rates unchanged in September, as recently published data showed a decline in U.S. inflation for the second consecutive month. The U.S. Consumer Price Index rose 3.4% year-over-year in July, compared to 3.5% in June. This was reported by the Bureau of Labor Statistics. However, there remains some chance of a rate hike—some financial experts have already expressed the view that the central bank should raise rates by the end of 2026 to bring inflation, which exceeds the 2% target, under control.
Meanwhile, tensions are rising in the Middle East, and oil prices are highly volatile: on August 17, Brent crude reached $88.44 per barrel. As before, oil prices are being influenced by the situation in the Strait of Hormuz. Last week, Iran stated that it had no intention of lifting its blockade of the strait following remarks by U.S. President Donald Trump regarding the possibility of establishing control over this strategic waterway.
The EUR/USD pair has been trending toward a weaker dollar in August—as of August 17, the exchange rate stands at $1.1594 per euro, whereas the month began at $1.1485 per euro.
Domestic Ukrainian Context
The domestic foreign exchange market has seen high demand for foreign currency in August. While the NBU sold $4.1 billion through interventions over the four weeks of July, the volume of currency sold exceeded $2.11 billion in the first two weeks of August.
International reserves are currently at a high level, which is important for macrofinancial stability and, of course, for the NBU’s ability to meet demand for foreign currency. According to the regulator, international reserves stood at $51.2 billion at the beginning of August; in July, they decreased by 0.1%. The NBU explained that this trend is due to the National Bank’s foreign exchange interventions and the country’s debt payments in foreign currency: these transactions slightly exceeded inflows from international partners, the issuance of foreign currency bonds, and the conversion into hryvnia of funds received under the Ukraine Support Loan program. According to the NBU’s balance sheet data, in July the bank sold $4.76 billion on the foreign exchange market and purchased $1.8 million.
In August, the NBU announced a major package of easing measures for foreign exchange restrictions on individuals, which took effect on August 11. Among the key changes is an increase in the limit on non-cash foreign currency purchases by individuals from 50,000 UAH to 200,000 UAH per month. The daily limit on cash withdrawals by individuals from foreign currency accounts in Ukraine and abroad is also being raised from 100,000 UAH to 200,000 UAH. In addition, the NBU has expanded Ukrainians’ ability to pay for goods, work, and services abroad using hryvnia accounts. The National Bank expects that the new package of foreign exchange liberalizations will generate only moderate additional demand for foreign currency, which will be insignificant relative to the size of the foreign exchange market.
Meanwhile, Ukraine continues to receive international financial support, and at the end of July, it was announced that the EU would provide a tranche of 3.47 billion euros as part of the Ukraine Support Loan. These funds are intended to finance Ukraine’s defense needs, specifically for missiles, air defense systems, fighter jets, and drones. As for the IMF loan, the volume of disbursements and the frequency of tranches depend on compliance with the conditions of the EFF program. Two more reviews of the program’s implementation with the IMF are scheduled for 2026—in September and December. If all conditions are met on time, Ukraine will be able to secure over $2.4 billion from the Fund.
Among the pressing economic challenges facing the country as it confronts Russian aggression is exports. As a result of Russian strikes on port infrastructure, maritime shipments have nearly ground to a halt, and the Ministry of Agriculture reports that losses in the agricultural sector could reach $3 billion this year. Meanwhile, the government has already lowered the minimum export prices for certain types of agricultural products to prevent a halt in exports of grains and oilseeds. However, negative trends are not limited to the agricultural sector, as the enemy is targeting major logistics hubs, which is disrupting food supplies to supermarket chains; moreover, rerouting logistics routes could lead to increased costs for producers and retailers. All of this points to a possible rapid rise in food prices, particularly for dairy products, vegetables, and fruits. As a reminder, in July 2026, inflation accelerated to 7.7% year-over-year, while prices in Ukraine rose by 0.3% month-over-month.
U.S. Dollar Exchange Rate: Trends and Analysis
Devaluation expectations have not disappeared, but in August the exchange rate remains under the full control of the NBU; consequently, temporary stability is ensured by the regulator fulfilling importers’ orders on the interbank foreign exchange market. In early August, the official exchange rate stood at 44.64 UAH per dollar, and on August 17, the NBU’s exchange rate reached 44.70 UAH per dollar. On the interbank market in mid-August, trading took place at a rate of 44.70–44.78 UAH/USD. In the cash market, the exchange rate changed only slightly: in mid-August, at banks and currency exchange offices, the buying rate ranged from 44.30 to 44.55 UAH/USD, and the selling rate ranged from 44.90 to 45.10 UAH/USD. Spreads narrowed in August to 0.4–0.6 UAH/USD.
Key influencing factors:
• Rising demand for foreign currency is offset by an increase in the volume of foreign exchange interventions by the NBU. The National Bank acts as the main seller of foreign currency and, through its supply of foreign currency, prevents the hryvnia from further devaluation.
• International factors: The protracted conflict in the Middle East is leading to erratic fluctuations in the oil market and rising prices for petroleum products. U.S. President Donald Trump stated that he intends to declare the Strait of Hormuz U.S. territory.
Tehran has emphasized that the strait will be closed or opened solely at Iran’s discretion.
• The hryvnia has strengthened on Ukraine’s cash foreign exchange market. In mid-July, the selling rate for the dollar at bank teller windows and currency exchange offices remains within the range of 44.90–45.10 UAH/USD.
• Market expectations: The main focus is on the Federal Reserve’s September meeting, when a decision to raise the benchmark interest rate is possible. However, recent inflation reports indicate a slowdown in the pace of price growth, which could well influence the Committee’s decision to leave the rate unchanged. In Ukraine, the authorities are focused on ensuring the country’s defense and thoroughly preparing for winter. The government’s main priority is protecting critical infrastructure and building up reserve stocks of fuel and equipment needed for the rapid restoration of damaged facilities.
Forecast
• Short term (1–2 weeks): base range of 44.80–45.10 UAH/USD; the NBU will attempt to keep the exchange rate within the range of 44.70–44.85 UAH/USD through interventions.
• Medium term (2–3 months): 44.95–45.30 UAH/$. The Federal Reserve’s September decision on the federal funds rate and clear signals of an impending peace in the Middle East may, in the long run, contribute to the strengthening of the dollar on the international stage. In Ukraine, the dollar will also strengthen.
• Long term (6+ months): In the baseline scenario, the depreciation trend remains the main factor, and the exchange rate could range between 45.40–46.20 UAH/USD by the end of the year. Key factors influencing the exchange rate will continue to include the volume of international reserves, new multimillion-dollar inflows of financial aid from partners, and the fulfillment of the state budget revenue plan; the situation in the energy sector and the level of protection of critical infrastructure facilities against destruction resulting from massive attacks by the Russian Armed Forces will also play a role.
Euro Exchange Rate: Trends and Analysis
Throughout July, the euro strengthened on the domestic market against the backdrop of the international market, where the dollar was weakening while the euro was gaining ground. The official euro exchange rate in Ukraine stood at 51.27 UAH/euro in early August and reached 51.71 UAH/euro by August 17. On Ukraine’s cash market, the euro has been strengthening throughout August. On August 17, the buying rate ranged from 51.05 to 51.65 UAH/euro, while the selling rate ranged from 51.85 to 52.15 UAH/euro. The spreads between the buying and selling rates for the euro widened in August and ranged from 0.45 UAH/euro to 1 UAH/euro.
Key influencing factors:
• On the international market, the euro is strengthening against the backdrop of a weaker dollar. Currency quotes are influenced by factors such as expectations of a Fed rate hike in September and rising tensions in the Middle East.
• The ECB may raise rates in September. The basis for such a decision will be rising prices in the EU: inflation in the eurozone rose to 2.9% in July.
• After a prolonged period of stability, the euro exchange rate in Ukraine began to rise sharply in August. There is no frenzied demand for the euro, and banks and currency exchange offices have sufficient cash reserves to meet demand.
Forecast:
• Short term (2–4 weeks): On the Ukrainian market, the euro may remain within the range of 51.80–52.45 UAH/€.
• Medium term (2–4 months): if the euro continues to strengthen on the international market, the exchange rate in Ukraine will reach the range of 52.20–52.90 UAH/€.
• Long term (6+ months): By the end of the year, the euro exchange rate may be within the range of 52.50–53.60 UAH/€. The main factors influencing the euro exchange rate remain unchanged: the U.S. Federal Reserve’s decision on the benchmark interest rate, the ECB’s decision on interest rate changes, the inflation rate in the EU, oil prices, and developments in the conflict in the Middle East.
Recommendations for Businesses and Investors
The dollar is losing ground against the euro on the international market. The downward trend in the U.S. currency is driven by investors’ expectations of a benchmark rate hike in September, as well as the escalation of the conflict between the U.S. and Iran. A further decline in the dollar’s exchange rate could help slow the hryvnia’s depreciation.
The Fed may adjust key interest rates. A rate hike as early as September could support the dollar in the global market, as the value of Treasury bonds will rise, which is likely to increase demand for U.S. securities, boosting the dollar.
Focus on liquid currencies. Global geopolitics is causing currency rates to fluctuate, but the dollar and the euro remain the base currencies for investors when formulating an effective currency strategy.
A war in Iran can no longer shake the dollar’s position. The acute phase of the conflict in the Middle East is not a reason to abandon investments in dollars.
Buying dollars is a timely and profitable strategy. While the domestic market is experiencing temporary, fragile stability, it makes sense to invest in the U.S. currency as part of both medium- and long-term currency strategies.
Currency savings aren’t limited to cash.
The National Bank of Ukraine’s (NBU) increase, effective August 11, of the permitted limit for purchasing non-cash foreign currency to 200,000 UAH allows investors to increase their holdings in foreign currency accounts at banks. However, cash savings will remain the key component.
Investments in precious metals and stocks are possible, but they will not be the main focus of a foreign exchange strategy. As of August 11, the NBU has allowed the unimpeded transfer of 200,000 UAH from a bank account to non-cash bank metals and securities issued by foreign entities. However, such investments should constitute only a small portion of savings—within 15%—while the dollar and the euro should remain the core components of a foreign exchange strategy.
Safe investments—a guarantee of capital preservation. In various financial scenarios, it is important to identify stable sources of income and ensure the reliability of your asset allocations.
The euro is an important part of an investment portfolio. The euro’s appreciation to 51.70 UAH/EUR opens up new opportunities for investors: either to make a quick profit by selling a portion of their euro-denominated savings, or to purchase additional euros to expand their portfolio in this currency.
Keep an eye on decisions by the U.S. and EU central banks, as well as on inflation and labor market statistics in the U.S. and EU. Since both the Fed and the ECB are preparing to consider rate hikes in September, key statistical data on inflation and employment levels in August will serve as the basis for regulators when making major decisions.
Diversification is the key to investment security. Investors should build currency portfolios across various currencies, and while the liquid U.S. dollar and euro remain the core holdings, it is advisable to periodically allocate a portion of funds to other reliable European currencies, including the British pound and the Swiss franc. It is also advisable to monitor Poland’s economic forecasts to consider potentially converting 5% of your savings into Polish zlotys.
Deposits in hryvnia—only for savings intended for purchasing foreign currency. It is advisable to choose hryvnia deposits with a term of 3–6 months and a mandatory rollover option. The interest rate on the deposit is not critical in this case, since the savings will eventually be converted into foreign currency.
What’s important in the news. Investors should monitor news from the White House regarding the prospects for the U.S.-Iran conflict. Information on U.S. Treasury bond yields will also be important. Major currency news will emerge in September—following the meetings of the Federal Reserve and ECB committees, it will become clear whether key interest rates are rising in Europe and the U.S. In Ukraine, the main indicators of the situation on the foreign exchange market will be the receipt of financial aid from partners, the level of international reserves, the situation with grain exports, developments on the front lines, information on the state of the energy sector and preparations for winter, as well as the volume of natural gas injected by Naftogaz into underground gas storage facilities.
This material was prepared by analysts at KYT Group, an international multi-service product-based 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 warranties 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 reliable. We recommend consulting with an independent financial advisor before making any investment decisions.
REFERENCE
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The National Bank of Ukraine’s (NBU) increase of the monthly limit on non-cash foreign currency purchases by individuals from 50,000 UAH to 200,000 UAH may lead to a short-term rise in demand, but will not have a significant impact on the foreign exchange market, according to bankers surveyed by Interfax-Ukraine.
“In our opinion, there may be a certain surge in demand for non-cash foreign currency purchases in the first few days after the changes take effect,” said Emal Bakhtari, director of the financial instruments sales department at Raiffeisen Bank.
According to him, the proportion of customers who previously found the monthly limit of 50,000 UAH insufficient is relatively small. He suggested that the National Bank would, if necessary, smooth out short-term spikes in demand through currency interventions.
Serhiy Mamedov, Chairman of the Board of Globus Bank, also does not expect a proportional increase in demand following the fourfold increase in the limit. According to him, the limit determines only the maximum possible transaction amount, whereas the public’s purchase of cash foreign currency was not previously restricted by a similar monthly limit.
Currency liberalization in and of itself is unlikely to pose a threat to exchange rate stability at this point, Mamedov believes. Substantial international reserves give the regulator the ability to smooth out excessive exchange rate fluctuations, and the high discount rate should maintain the attractiveness of hryvnia-denominated instruments; however, this model depends to a large extent on the regularity of international financial assistance.
Anton Kurinny, a dealer in OTP Bank’s Global Markets Department, also forecasts an increase in demand for foreign currency but does not expect this to have a significant impact on the interbank market, where importers’ needs and the shortfall in export proceeds remain the more significant factors.
According to Kurinnyi, additional demand may also arise in the cash market following the increase in the daily limit for currency withdrawals from 100,000 UAH to 200,000 UAH, since the cash exchange rate hovers close to interbank quotes and is sometimes even lower than them.
Mamedov identified the worsening balance between goods imports and exports as a separate risk. According to the data he cited, in January–July 2026, goods imports totaled $58.1 billion, while exports amounted to $24.1 billion, resulting in a trade deficit of approximately $34 billion.
According to the banker, a further increase in the trade imbalance and problems with maritime logistics could intensify structural demand for foreign currency and the need for NBU interventions, while the dynamics of reserves will also depend on the volume of international financing.
Oleksandr Pecheritsyn, director of the analytical research department at Raiffeisen Bank, assesses the risk of a significant outflow of household savings from hryvnia deposits and domestic government bonds (OVGZ) into foreign currency as limited.
In his view, hryvnia-denominated deposits and domestic government bonds remain more attractive than holding savings in foreign currency cash, and the growth in household investments in domestic government bonds was primarily driven by their higher returns relative to the expected devaluation of the hryvnia.
At the same time, Pecheritsyn suggests that raising the limit on non-cash foreign currency purchases could reduce the volume of so-called “technical” foreign currency deposits, which households opened for three months to subsequently obtain foreign currency.
“If the volume of such deposits declines and banks need foreign currency resources to conduct active operations—particularly lending—interest rates on foreign currency deposits may rise slightly. At the same time, this will not necessarily become a general trend across the entire banking sector,” he noted.
Raising the daily limit on cash foreign currency withdrawals could theoretically also boost public interest in foreign currency deposits; however, according to Pecheritsyn’s assessment, given the population’s average incomes and savings, this effect will not be widespread and will not lead to a significant increase in such deposits.
As previously reported, effective August 11, the NBU increased the monthly limit on the public’s purchase of non-cash foreign currency from 50,000 hryvnias to 200,000 hryvnias and extended it to include the purchase of non-cash bank metals and securities issued by foreign entities.
The regulator also raised the daily limit on cash withdrawals by individuals from foreign currency accounts in Ukraine and abroad from 100,000 hryvnias to 200,000 hryvnias and eased a number of other foreign exchange restrictions for individuals and legal entities.
The National Bank stated that the new package of easing measures will not pose risks to the stability of the foreign exchange market and has already been factored into the updated macroeconomic forecast, which projects an increase in international reserves to nearly $70 billion by 2026.
The National Bank of Ukraine is preparing a new, large-scale foreign exchange liberalization package that, for the first time since the start of the full-scale war, is expected to significantly expand individuals’ opportunities to conduct foreign exchange and financial transactions abroad. NBU Governor Andriy Pyshnyy made this announcement on August 10. According to him, a significant portion of the consultations with the International Monetary Fund regarding this new phase of liberalization has already been completed, and the National Bank plans to announce the final details once the necessary procedures are finalized.
“We are preparing a currency liberalization package that, for the first time, will have a tangible impact on individuals as well,” said the NBU Governor.
Until now, the main stages of currency liberalization during the war have focused primarily on businesses: the NBU has gradually expanded opportunities for paying for imports, servicing foreign loans, repatriating dividends, and attracting capital from abroad. Transactions by individuals, including money transfers abroad, are part of a later stage of lifting restrictions in the NBU’s strategy.
According to sources in the banking sector, one of the main expected changes will be an increase in the monthly limit on transfers by individuals from foreign currency cards issued by Ukrainian banks to cards abroad, from 100,000 UAH to 200,000 UAH in equivalent value. Sources also note a possible roughly twofold increase in a number of other existing foreign currency limits; however, the NBU has not yet officially published their final parameters.
Currently, the NBU allows transfers from a foreign-currency payment card issued by a Ukrainian bank to another individual’s card abroad of up to 100,000 UAH equivalent per month. Transfers from hryvnia cards directly to cards issued by foreign banks remain prohibited.
For hryvnia cards, there is also a limit on non-cash payments for goods and services abroad of 100,000 UAH equivalent per month. Cash withdrawals abroad from hryvnia accounts are limited to 12,500 UAH equivalent per seven calendar days. There are no general limits of this type for payments with foreign currency cards for ordinary goods and services, although certain restrictions remain in place for some categories of transactions.
Thus, if the changes announced by the banking market are approved as expected, the new package will become one of the most significant relaxations of restrictions directly affecting Ukrainian citizens starting in 2022. Above all, it will simplify support for relatives abroad, the use of funds from Ukrainian accounts during extended stays abroad, and other cross-border transactions by individuals.
At the same time, this new phase of liberalization does not mean the complete abolition of foreign exchange controls.
The NBU maintains a managed floating exchange rate regime and continues to cover the structural foreign exchange deficit in the market through its own interventions. According to the regulator’s strategy, the further lifting of restrictions depends not on a predetermined timeline, but on the state of the foreign exchange market, international reserves, inflation, and other macrofinancial conditions.
The transition to easing restrictions for the general public is of particular importance, as such measures are part of the third stage of currency liberalization in the NBU’s roadmap, alongside foreign investments, freer capital flows, and the expansion of other cross-border financial transactions. At the same time, the NBU may implement certain steps from different stages in parallel, provided that macroeconomic conditions permit.
In January 2026, the NBU had already significantly expanded opportunities for businesses by introducing a so-called “credit limit,” which allows companies to use foreign loans raised after January 1 for a range of transactions, including servicing existing debts and additional repatriation of dividends. In April, the regulator implemented another round of easing measures for certain categories of individuals and companies.
The final amounts of the new limits for individuals, the date they take effect, and the full list of permitted transactions are to be determined by a separate decision of the NBU’s Board. As of the afternoon of August 10, the relevant resolution had not yet been published on the regulator’s official website.
According to preliminary data, Ukraine’s international reserves decreased by $70.4 million, or 0.1%, to $51.2 billion in July, the National Bank of Ukraine (NBU) reported on Friday.
“This trend was driven by the National Bank’s foreign exchange interventions and the country’s debt payments in foreign currency,” the regulator noted on its website.
According to the published data, net international reserves in July decreased by $668.9 million, or 1.8%, compared to June, to $36.3 billion.
The share of dollar-denominated assets in international reserves as of August 1, 2026, decreased to 64.7% from 66.5% a month earlier, while the share of euro-denominated assets rose to 27.0% from 25.6%. A year ago, these figures stood at 73.5% and 17.5%, respectively.
The share of gold in international reserves as of early August stood at 7.0%, compared with 6.9% a month earlier and 6.8% a year earlier.
It is noted that $1.6 billion was credited to the government’s foreign currency accounts at the National Bank in July, including $683.3 million from the International Monetary Fund (IMF), $498.7 million through World Bank accounts, and $458.6 million from the placement of foreign currency government bonds.
In addition, Ukraine received $5.1 billion from the European Union (EU) as part of a defense tranche under the Ukraine Support Loan program; however, due to the earmarked nature of this funding, these funds do not directly enter the international reserves. In July, the government converted $3.4 billion of these funds into hryvnia, which correspondingly contributed to an increase in international reserves.
At the same time, the Ukrainian government paid $515.4 million for servicing and repaying public debt denominated in foreign currency, including $433.3 million for servicing and repaying foreign-currency government bonds, $58.7 million for servicing and repaying debt to the World Bank, $6.9 million for servicing debt to the EU, and $16.5 million for debt to other creditors.
In addition, Ukraine paid $174.2 million to the IMF.
The revaluation of financial instruments in July increased the value of reserves by $300.6 million.
The National Bank’s foreign exchange interventions totaled nearly $4.79 billion, which is $296.0 million less than in June.
“The current level of international reserves is sufficient to finance 4.2 months of future imports,” the National Bank added.
As previously reported, in its July macroeconomic forecast, the regulator raised its estimate of international reserves for the end of 2026 to $69.7 billion from $64.8 billion, for 2027 to $73.7 billion from $66.5 billion, and for 2028 to $70.0 billion from $61.1 billion.
Issue No. 2 – July 2026
In the second half of July, the hryvnia was losing ground, but the NBU tried to participate in trading as much as possible and stem the national currency’s downward drift. As a result, as of July 31, the official exchange rate was 44.69 UAH/USD, whereas at the beginning of the month it stood at 44.79 UAH/USD. The strengthening of the national currency occurred only at the end of the month; over the last two weeks of July, fluctuations toward devaluation prevailed.
High demand for foreign currency persists in Ukraine for the second consecutive month. As a reminder, in June, according to official data, the National Bank sold $5.087 billion through interventions. This is the highest figure in 2026. The July figure is expected to be lower than the previous month’s “record.” However, it is already obvious that the hopes voiced by many analysts for a summer surge in agricultural exports—and along with it, higher inflows of foreign currency revenue that would support the hryvnia—did not materialize. Throughout July, Russia intensified missile and drone attacks targeting Ukrainian seaports, significantly constraining maritime shipments of agricultural products.
The Federal Reserve System (Fed) Committee meeting, to whose outcome traders’ attention had been pinned over the last month, took place on July 29. Following the meeting, it became known that the Fed left its benchmark interest rate unchanged, but left open the possibility of a future hike if inflation remains high. The statement notes that inflation in the US remains elevated, partly reflecting supply shocks that drove up prices in certain sectors, including energy. It is also known that the sharp rise in fuel prices caused by the US-Iran conflict pushed the annual inflation rate in the US up to 4.2% in May—the highest level in over three years. Since then, oil and gas prices have eased somewhat, but the resumption of hostilities in and around the Strait of Hormuz in late July raises concerns that fuel prices could remain elevated in the coming months. Nevertheless, high rates can drag on labor market growth; in this case, the Fed opted in favor of the labor market, effectively ignoring price increases.
The dollar reacted to the announcement of baseline rate stability by weakening against the euro—on July 30, the rate returned to 1.1450 USD/EUR and later reached 1.1475 USD/EUR, even though on the eve of the meeting, the currency pair was trading at approximately 1.1360 USD/EUR.
During July, demand for foreign currency shifted: while it dropped slightly at the start of the month, it picked up again later, forcing the NBU to scale up currency sales via interbank interventions. Thus, while the National Bank sold $871.2 million to importers during the first week, it sold $2.088 billion over the following two weeks. There is no additional support for the hryvnia from exporters: the export situation remains extremely challenging, especially given Russia’s frequent attacks on domestic seaports and port infrastructure. This affects not only agricultural exports, but also revenue for metallurgical enterprises. However, support for the national currency is coming from the international market, where the dollar managed to strengthen against the euro in July.
Based on July’s results, a decline in international reserves compared to June is possible, as reserves expand mainly through inflows from partners. However, new arrivals were scarce in July. It is known that this month Ukraine received a tranche of around $690 million from the IMF under the new four-year Extended Fund Facility (EFF) program. This program provides for credit assistance totaling approximately $2.2 billion. Funds received under the first tranche will be directed toward funding priority expenditures and ensuring macro-financial stability amid full-scale war.
Regarding EU aid, in late July the Council of the EU agreed on the updated Ukraine Plan under the Ukraine Facility. Media reports indicate this involves €10 billion, which Ukraine can access only under specific conditions—the document contains 27 indicators, ten of which require the passage of new laws. The updated plan also revises 34 out of 146 existing program implementation steps, pushing back deadlines for 12 reforms that require more time. Among the new reforms, special emphasis is placed on the rule of law, anti-corruption efforts, reforms necessary for Ukraine’s EU accession, the energy sector, and further integration into the EU internal market. The updated Ukraine Plan has already approved additional funding for Ukraine in 2026—namely €8.3 billion to be provided through the Ukraine Support Loan mechanism.
The new government in Ukraine, which is just beginning its work under new Prime Minister Serhiy Koretskyi, has not yet released precise data regarding its action plan. However, it is known that the Government Action Program should be submitted to the Verkhovna Rada in August. This will serve as an official benchmark for the specific measures the new Cabinet intends to implement and the economic and financial reforms planned for Ukraine in the near term.
The devaluation of the hryvnia continues; while the hryvnia managed to gain a bit of ground in the first half of July, devaluation became the defining feature in the second half of the month. At the beginning of July, the official exchange rate stood at 44.79 UAH/USD, and on July 29, the NBU rate reached 44.88 UAH/USD. On the interbank market in the final days of July, trading took place at 44.74–44.89 UAH/USD. Importers’ bids are satisfied by the National Bank as the primary currency seller. On the last day of July, the hryvnia strengthened—the official rate reached 44.69 UAH/USD. On the cash market, following the interbank trend, the rate strengthened as well: at banks and exchange booths, the buy rate hovered around 44.35–44.7 UAH/USD, while the sell rate was 44.95–45.10 UAH/USD. Spreads in July remained nearly unchanged, staying within 0.4–0.7 UAH/USD.
Surge in USD demand on the interbank foreign exchange market, though devaluation remains barely noticeable. The NBU acts as the main market maker, holding the hryvnia back from sliding past 44.97 UAH/USD via interventions.
Slow and minor fluctuations in the cash market. Throughout July, the rate at bank counters and exchange offices averaged between 44.95 and 45.10 UAH/USD.
International factors: The US-Iran conflict is in an acute phase, the Strait of Hormuz is blocked, and the US has imposed sanctions on two Iranian companies participating in a scheme where Iran forces vessels to purchase “insurance” to pass through the Strait of Hormuz. Analysts project that Middle East hostilities will persist for several more months.
Behavioral market expectations: After the Fed left rates unchanged in late July, investors are anticipating the Fed Committee’s autumn meetings, where a benchmark rate hike decision could be made. In Ukraine, the primary focus is on the security situation, winter preparations, and financial aid agreements with partners. Decisions and draft laws from the new government will also play an important role in outlining fiscal and tax factors capable of impacting future financial decisions.
Short-term (1–2 weeks): Baseline range of 44.95–45.20 UAH/USD; the hryvnia will lean toward the upper bound, while the NBU will attempt to pull the rate back into the 44.80–44.88 UAH/USD corridor.
Medium-term (2–3 months): 45.15–45.40 UAH/USD. Clear certainty regarding the Fed benchmark rate level and new agreements between the US and Iran could favor a stronger dollar, which would positively impact the hryvnia.
Long-term (6+ months): Under the baseline scenario, the main devaluation trend persists, and the exchange rate could hit 46.50 UAH/USD by year-end. However, beyond the war in Ukraine and Russia’s intensified missile and drone strikes on infrastructure, the key driver will be partner inflows, which directly affect international reserves and the NBU’s ability to satisfy importer demand via interventions.
Throughout July, the euro exchange rate on the domestic market remained nearly static, with very minor fluctuations. However, everything changed the day after the Fed Committee meeting—the euro began losing ground globally, and in Ukraine, the official euro rate reached 51.27 UAH/EUR on July 31.
In Ukraine’s cash market, euro exchange rate stability was maintained in July. However, new euro horizons are motivating retail sellers to adjust their rates. As of July 31, the buy rate sits in the 50.56–51.10 UAH/EUR corridor, while the sell rate is 51.50–51.85 UAH/EUR. Spreads between buying and selling rates narrowed slightly toward month-end to a range of 0.45–0.80 UAH/EUR.
The dollar is regaining ground against the euro internationally. The euro began to decline following the US Fed Committee’s decision to hold benchmark rates steady.
The ECB made no changes to benchmark rates in July. The level of uncertainty in the EU remains high, and the full impact of the energy shock on inflation has not yet fully fed through into the economy. The ECB is monitoring the intensity and duration of this impact, as well as its indirect consequences, very closely.
In Ukraine, the euro rate began rising in July after a prolonged quiet period. Euro supply is sufficient to meet retail market demand.
Short-term (2–4 weeks): In the Ukrainian market, the euro could remain in the 51.30–51.55 UAH/EUR range.
Medium-term (2–4 months): If the euro continues to strengthen globally, the rate in Ukraine will reach 51.50–52.25 UAH/EUR.
Long-term (6+ months): By year-end, the euro rate could range between 52.60 and 53.60 UAH/EUR. The main factors driving the rate are Fed decisions on benchmark rates, ECB rate decisions, EU inflation levels, and the situation in the Middle East.
August could bring fast-moving exchange rate surprises. The escalation of the US-Iran conflict and wild oil price swings heighten volatility risk. At such times, a currency strategy must be extremely cautious, yet decision-making flexibility remains vital for capturing yield and preserving capital.
Global conflicts are a reason to trust only the strongest currencies. Expected shifts relate to a potential resolution of the US-Iran conflict, which will influence the future trajectory of the EUR/USD pair.
A stable Fed rate provides no boost to the dollar. The EUR/USD pair is heavily influenced by geopolitics, but rate hike forecasts also matter. Investors need to monitor US economic news to timely pivot their currency savings strategy.
Safe investments above all. A small portion of a portfolio can be allocated toward generating fast profits from speculative trading, but the bulk of funds should be placed into low-risk capital preservation—namely physical currency purchases.
Liquidity in the crosshairs of currency strategy. A lack of stability and predictability elevates the role of liquid currencies, keeping the dollar and euro central to portfolios. Both medium- and long-term investor plans should be built around investments in these currencies.
A sharp shift by global investors toward the euro is a signal to concentrate funds in the dollar. The US economy is currently expanding actively and the US currency remains the most liquid asset, so investors should keep approximately 50–60% of their currency portfolio in USD.
Exiting part of currency holdings should only follow thorough rate movement analysis. The rise of the euro to 51.27 UAH/EUR offers fresh opportunities to partially sell off euro assets acquired early in the year when the rate was at 49.51 UAH/EUR. However, it is not time to dump euros entirely, as rates could rise further over the course of 2026.
A balanced currency portfolio shouldn’t consist solely of dollars. If diversification is part of your personal financial plan, adding 10% in Swiss francs to baseline currencies makes sense. Purchasing British pounds can also be considered.
National currency for routine expenses, dollars for long-term investments. The devaluation trend for the national currency persists despite multi-billion dollar NBU interventions to maintain exchange rate stability. US dollar savings remain a reliable guarantee against capital erosion.
What matters on the news front: Investors should analyze everything linked to oil quotes, Middle East developments, and new US-Iran agreements. It is also important to track labor market data and US inflation figures, which will ultimately form the foundation for upcoming Fed Committee decisions on rate changes. A Fed statement signaling a rate hike will be the cue to adjust currency strategies. The next Fed Committee meeting in mid-September will reveal the future path of the EUR/USD pair. In Ukraine, the key drivers affecting the FX market will be international reserve levels, tranche disbursements of loans and financial aid from partners, data on export volumes and port infrastructure, the energy situation, and frontline conditions.
This material was prepared by analysts at the international multi-service FinTech platform KYT Group and reflects their expert, analytical professional judgment. The information presented in this review is purely informational and must not be construed as actionable advice.
The company and its analysts make no assurances and accept no liability for any consequences arising from the use of this information. All information is provided “as is,” without any additional guarantees of completeness, timeliness obligations, updates, or supplements.
Users of this material must independently evaluate risks and make informed decisions based on their own assessment and analysis of the situation using various available sources they consider sufficiently qualified. Before making any investment decisions, consulting an independent financial advisor is recommended.
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According to Interfax-Ukraine, the National Bank of Ukraine has completed a significant portion of its negotiations and discussions with the International Monetary Fund (IMF) and will soon adopt and announce a new, substantial package of foreign exchange liberalization measures. As NBU Governor Andriy Pyshnyy stated during a press briefing on Thursday, the upcoming liberalization measures will apply to both individuals and businesses.
“We have completed a significant portion of the negotiations and discussions with our colleagues at the International Monetary Fund. Accordingly, a significant package of foreign exchange liberalization measures will be announced, affecting individuals, including businesses. The National Bank has always prioritized the interests of Ukrainian businesses regarding foreign exchange liberalization,” the regulator’s head noted.
Pyshnyy emphasized that stimulatory foreign exchange liberalization has remained one of the National Bank’s key priorities since 2023. According to him, the regulator supports measures that have a positive effect and stimulate the country’s economic recovery and development.
As previously reported, in the materials for the first review of the Extended Fund Facility (EFF) program, published on its website, the IMF notes that currency liberalization should depend on the fulfillment of key preconditions—including deeper foreign exchange markets, well-anchored inflation expectations, and sustained financial stability—while ensuring that these are balanced with economic needs.
