The National Bank of Ukraine is considering the possibility of changing the base currency for the orientation of monetary policy - from the US dollar to the euro. Such a scenario is still hypothetical, but is conditioned by a number of geopolitical and economic factors.
NBU Chairman Andrii Pyshnyi has stated this in a comment to Reuters.
According to Pyshnyi, the following points in favor of switching to the euro as the base currency are: Ukraine's expected accession to the European Union, the strengthening of the EU's role in supporting the country's defense capabilities, as well as "greater volatility in world markets and the likelihood of fragmentation of global trade".
"This work is complex and requires high-quality, versatile preparation," he emphasized, commenting on the potential change of the key reference currency.
Economic growth and risks
The Chairman of the National Bank noted that the growth of investment and consumer activity due to rapprochement with the EU can increase the pace of economic development.
In his opinion, if the situation normalizes and the economy recovers, growth "will increase slightly over the next two years to 3.7-3.9%."
However, he stressed that the trajectory of the economy directly depends on the war.
"A quick end to the war would definitely be a positive scenario with good economic results if it included security guarantees for Ukraine," Pyshnyi noted.
At the same time, he warned: "It will probably take time to fully realize the economic benefits of ending the war."
External financing
This year, Ukraine expects to receive USD 55 billion in foreign aid, which will cover the budget deficit and help create reserves for the future, the head of the NBU said.
"We predict that in 2026, Ukraine will receive about USD 17 billion, and in 2027 – USD 15 billion," Pyshnyi said.
Current situation with the dollar
As Reuters notes, after Donald Trump's victory in the presidential election, the US dollar fell by more than 9% against a basket of major currencies - investors are reducing interest in American assets.
At the same time, according to Pyshnyi, dollar transactions remain dominant in the Ukrainian foreign exchange market. But the share of the euro is gradually increasing:
"The share of transactions denominated in euros is growing in most segments, although so far moderately."
After the start of a full-scale war in February 2022, the NBU fixed the hryvnia exchange rate at around UAH 29 per dollar and introduced currency restrictions. In 2023, there was a transition to a managed exchange rate regime, in which the dollar is used as a reference for currency interventions and smoothing fluctuations.
Recall that the National Bank introduced managed exchange rate flexibility from October 3, 2023. The NBU has abolished all currency restrictions on the import of works and services and allowed the repatriation of "new" dividends. The National Bank of Ukraine has introduced new approaches to determining the list of currencies to which the official hryvnia exchange rate is set daily, and has also abolished the list of currencies for the monthly setting of the official exchange rate.
Who we are: About us, Contacts. How we write news and our principles: Editorial code. We did our best. If you found this valuable – please support us.
To request a correction, please send an email.