Hryvnia began to strengthen - what will happen next with the national currency
Kyiv • UNN
The national currency is regaining its positions due to expectations of financial assistance from the EU and the IMF. However, the trade deficit and budget plans are putting pressure on the exchange rate.
The cash exchange rate of the hryvnia in Ukraine shows signs of strengthening. After several weeks of weakening, the national currency began to regain its positions, reacting to both real financial inflows and market expectations. Ivan Us, Candidate of Economic Sciences, chief consultant of the National Institute for Strategic Studies, told UNN journalist more about what is behind the new trend and whether it will last.
Details
According to the economist, the key factor in the current strengthening of the hryvnia was the expectation of external financial support. This refers to both actual inflows and political signals regarding future loans. These are what shape market sentiment and influence the supply and demand for currency.
I think, first of all, the expectation that there will still be external support for Ukraine. We understand that as soon as such signals appear, like the recent first tranche from the IMF, it immediately affects the market. Now, the possibility of receiving about 90 billion euros from the European Union for two years is also being actively discussed. That is, currency enters the country, and this always contributes to the strengthening of the national monetary unit.
The economist explains: the foreign exchange market operates according to the basic laws of supply and demand. When there is more foreign currency, the hryvnia automatically receives support. However, even positive news does not guarantee long-term stability.
This does not mean that the hryvnia has become significantly stronger. Rather, we see a change in trend, and after a period of weakening, there has been some recovery. But markets are very emotional; they react quickly to any news. Today there is information about aid - the hryvnia strengthens. Tomorrow doubts arise, and the situation may change.
An additional risk for the exchange rate remains the significant deficit in foreign trade. According to the expert, in the first two months of the year alone, the negative balance has already reached a significant level. This puts pressure on the hryvnia, regardless of short-term news.
We have a negative balance of 8.3 billion dollars in just two months. Previously, such a figure for a year was considered very bad news, but now it is an indicator for a short period. This means that the general trends remain negative, and they cannot be ignored.
Another important benchmark remains the state budget. It includes an average hryvnia exchange rate that differs significantly from current indicators, the expert says. This indicates expectations of a gradual weakening of the currency throughout the year.
The budget for 2026 includes an average exchange rate of 45.7 UAH per dollar. This does not mean that it will necessarily be so, but it is a certain benchmark. Currently, we have only crossed the 44 mark, but on average for the year, the rate should be higher, according to calculations.
At the same time, the situation on the foreign exchange market largely depends on political decisions – both in Ukraine and beyond its borders. In particular, delays in international aid can quickly change the dynamics of the exchange rate.
If information appears that aid will be provided, the hryvnia reacts positively. If problems arise, for example, the blocking of decisions by individual EU countries, then we immediately see the opposite reaction. The market is very sensitive to such signals.
He also emphasizes the role of domestic policy, in particular, tax decisions. The further support of Ukraine by international partners depends on this direction.
If there are no decisions on raising taxes, this could jeopardize the receipt of financial assistance. And without these funds, there will be risks for payments, including social ones. And then the exchange rate could sharply increase due to negative expectations.
In conclusion, the economist advises Ukrainians not to rely on short-term fluctuations and to diversify their savings, adding that in the near future, the foreign exchange market will remain unstable and dependent on news.
The risk of a sharp increase in the dollar and euro exchange rates always exists. Therefore, it is worth having currency, preferably in the form of a bicultural basket, that is, both dollar and euro. This allows minimizing risks and better reacting to market changes.
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