The financial support of the International Monetary Fund will help stabilize the situation in the foreign exchange market. However, currency fluctuations will not be avoided in Ukraine until the end of the year. The dollar will continue to rise, and by the beginning of 2025, the price of the currency may rise by about 2 hryvnias. This forecast was made in an exclusive commentary to UNN by Olena Sosedka, co-founder of Ukraine's first fintech ecosystem Concord Fintech Solutions.
Context
Over the past week, the dollar exchange rate in Ukraine has been rising sharply. As of September 18, 2024, the official exchange rate was set at UAH 41.41 per dollar.
The hryvnia volatility we are currently witnessing is a result of a number of factors, including global economic uncertainty and the challenges Ukraine faces due to the war and its consequences for the economy. The depreciation of the hryvnia is putting more pressure on households and businesses, especially given the rising prices of imported goods,
The expert does not rule out that the exchange rate will continue to grow until the end of the year.
The expected appreciation of the dollar by the end of the year can be explained by the lack of foreign currency on the market, which is driven by inflationary risks and restrictions on access to international capital markets. It is important for the government and the National Bank of Ukraine to take steps to stabilize the financial system and increase investor confidence. At this stage, the priority should be to ensure macroeconomic stability and support domestic businesses,
She reminded that Ukraine expects to receive another loan tranche from the International Monetary Fund (IMF) in the fall. This financial support, according to Olena Sosiedka, will be key to stabilizing the foreign exchange market and reducing pressure on the hryvnia. In particular, the expert expects that receiving the tranche will help reduce panic in the foreign exchange market, increase Ukraine's foreign exchange reserves and partially restrain further growth of the exchange rate.
While short-term exchange rate fluctuations are possible, long-term stability will depend on the effectiveness of economic reforms and the government's ability to ensure macroeconomic stability. We expect that the overall upward trend in the value of the currency will continue, and the dollar may increase by about UAH 2 by the end of the year,
She also emphasized that the stability of the exchange rate directly depends on economic reforms and the government's ability to maintain macroeconomic stability, which will ultimately affect consumer prices and the welfare of the population.
Add
The government registered a draft law "On the State Budget of Ukraine for 2025" in the Verkhovna Rada. The document sets the exchange rate at 45 hryvnia to the dollar.
Recall
Ukraine and the IMF reached an agreement at the expert level on the fifth review of the $15.6 billion program. According to media reports, the IMF is likely to demand that Ukraine devalue the hryvnia, cut the discount rate and raise taxes. Fulfillment of these conditions will allow Kyiv to receive the next loan tranche worth $1.1 billion.