The NBU explains why the hryvnia exchange rate change will not solve the problem of currency shortage

The change in the hryvnia exchange rate is not able to eliminate the structural deficit of currency in the country. This is reported by the NBU, UNN writes.

Can a change in the hryvnia exchange rate eliminate the problem of a structural currency deficit? Under current conditions, no. That is why the NBU has chosen an exchange rate regime that allows the foreign exchange market to operate normally in such conditions 

According to the NBU, the main reason for this is the more than twofold increase in budget expenditures due to the war. 

The second is the country's significant import needs due to the destruction of production facilities and defense procurement. 

The exchange rate cannot solve the budget challenges. As for exports and imports, the effect of the exchange rate change on stimulating the former and discouraging the latter has weakened significantly 

In particular, exports are reportedly still based on commodities, primarily food, so the share of exports that are significantly affected by the exchange rate remains low. To increase exports, it is necessary to restore production capacity and reduce security risks. 

At the same time, the situation with imports has changed.

The share of imports that are highly dependent on exchange rate movements fell by 1.5 times, while inelastic imports increased by 1.7 times. Imports are significant both because of defense purchases and because many goods and services needed for production are currently imported. These include energy products, fertilizers, and transportation services (including the operation of the sea corridor). In addition, large-scale migration has significantly increased the expenses of Ukrainians abroad 

Currency exchange rate as of February 21: hryvnia devalued again21.02.25, 08:53 • 23695 views