Hryvnia stability and dollar uncertainty: expert explained what to expect from the currency market in the summer
Kyiv • UNN
Andriy Novak stated that there are no purely financial risks for the hryvnia. The exchange rate will be stable in the summer, strengthening is possible. Trump's customs policy will affect the dollar exchange rate.
Despite the promises of United States President Donald Trump to stop Russia's aggressive war against Ukraine, hostilities not only continue, but have also flared up with renewed vigor. In addition, there is a risk of resuming the active phase of the customs war launched by Trump against China, the European Union and other countries. How will all these events affect the exchange rate of the Ukrainian national currency in the summer and what to expect from the US dollar, economist Andriy Novak explained to UNN.
Is there a threat of hryvnia falling
"As of today, the situation with the hryvnia exchange rate is such that there are no purely financial and economic risks for the national currency. The only factor that can somehow devalue the hryvnia is the development of a very bad situation on the front for the Ukrainian army and Ukraine. Only such a course of events can somehow shake the hryvnia exchange rate," Novak explained.
The economist added that the hryvnia exchange rate in the summer may not only be quite stable, but one can also hope for a slight strengthening of the national currency.
"From a financial point of view, there are all conditions for the hryvnia exchange rate to be quite stable. In the summer, there may even be a slight strengthening of the hryvnia," Novak said.
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He also explained that Ukraine has all the resources to maintain a stable hryvnia exchange rate even in times of war. This is facilitated by economic support from partners.
"Ukraine, despite the war, has the financial capacity to maintain a stable exchange rate, because our partners are helping us. Not only in military terms, but also in financial and economic terms," the expert explained.
Due to this assistance, Ukraine has record international reserves, which allows it to maintain the hryvnia exchange rate.
"Therefore, despite the war, the NBU has record gold and foreign exchange reserves, which we did not have. Never, even in the best years. This allows the NBU to maintain a relatively stable hryvnia exchange rate for the conditions of war on our territory," Novak summed up.
How the dollar exchange rate will fluctuate
According to Novak, if US President Donald Trump and his team decide to continue the customs truce, the dollar may strengthen.
"If the Trump administration still continues this so-called trade truce for 90 days or completely abandons the idea of introducing these high duties for key partners, which include both China and Europe, then we can expect the dollar to strengthen against other national currencies," the economist explained.
"If Trump and his administration do not abandon their customs policy, then we should expect further devaluation of the dollar," the economist said.
Replacing the dollar with the euro - what are the prospects
The Governor of the National Bank Andriy Pyshnyi announced that Ukraine is considering replacing the US dollar with the euro as the base currency for the hryvnia.
He expressed his belief that potential accession to the European Union, "the increased role of the EU in ensuring our defense capabilities, greater volatility in global markets and the likelihood of fragmentation of global trade" are forcing the NBU to reconsider whether the euro should be the base currency for the Ukrainian hryvnia instead of the dollar. "This work is complex and requires high-quality, comprehensive preparation," Pyshnyi said.
Andriy Novak expressed a rather skeptical position on this possibility. He noted that such a decision cannot be made unilaterally.
"Various enterprises and businesses conduct their business with partners in the currency they have agreed on. This can be both the euro and the dollar. The NBU cannot influence such decisions in any way. For example, the car market consistently prefers dollars," Novak explained.
The NBU also clarified that transactions in US dollars continue to dominate in all segments of the Ukrainian foreign exchange market. However, the share of transactions denominated in euros is growing in most segments, although "so far moderately".
Such a revival of investment and consumer activity through closer ties with Europe and the normalization of the economy would help economic growth to increase slightly over the next two years to 3.7-3.9%. At the same time, Pyshnyi added that the economic trajectory largely depends on the development of hostilities.
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The situation on the foreign exchange market now
The foreign exchange market in Ukraine remains sufficiently stable for all key currencies involved in our country. As of now, the official dollar exchange rate is UAH 41.57/USD. In addition, the NBU has set the official euro exchange rate against the hryvnia at UAH 46.85/EUR. The official exchange rate of the zloty is UAH 10.97/PLN.
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