Expert reveals the reasons for the latest hryvnia devaluation and talks about the future of the Ukrainian currency

The hryvnia exchange rate remains sensitive to the impact of the war, and recent devaluation fluctuations are due to the escalation of the situation at the front and massive shelling of energy infrastructure. This opinion was expressed in an exclusive commentary to UNN by the Chairman of the Committee of Economists of Ukraine Andriy Novak. 

“The next wave of slight devaluation of the hryvnia to almost 42 UAH/USD cannot be called a 'sharp' increase and we need to take into account the circumstances. The circumstances now are force majeure of the highest level called war,” Novak said.

According to him, the occupation of a large part of the industrialized territory and agricultural land by the Russians is a severe blow to Ukraine's economy.

Given all the circumstances, the hryvnia is still holding up quite well, thanks in no small part to the external financial support that Ukraine receives. When the national currency devalues, it also means devaluation of the population's incomes, higher inflation, which leads to a decline in people's living standards

He notes that even if the budget for the next year provides for an average annual dollar exchange rate of “45 UAH/USD,” this does not mean that it will be so.

“The practice of previous years shows that the exchange rate set by different governments for the year never came true and the hryvnia was stronger. They set a higher exchange rate in order to have a certain “reserve”, and with this “reserve”, the budget for 2025 set the dollar at 45 UAH/USD,” Novak emphasized.

The expert notes that the dollar exchange rate will directly depend on the situation at the front.

“At the moment, everything in our economy depends on the developments and dynamics at the frontline. In fact, the last wave of hryvnia devaluation was caused by the deteriorating situation at the front and massive shelling of the energy sector. I can say the same about the next year, everything will depend on the situation at the frontline. If everything goes well and the situation is in Ukraine's favor, there will be no threat of greater devaluation,” he said.

According to him, even if the situation at the front is not in favor of the Armed Forces, the NBU will not allow the dollar to rise even more. 

Recall 

The NBU stated that the growth in net demand for foreign currency in Ukraine, driven by economic recovery and increased imports, puts additional pressure on the hryvnia exchange rate.