NBU not excluding possibility of binding hryvnia exchange rate to euro instead of dollar

The National Bank does not exclude the possibility of binding the hryvnia exchange rate to the euro instead of the dollar.

This is stated in the materials of the National Bank, Ukrainian News Agency reports.

At the meeting on February 28, 2024, the Money and Foreign Exchange Market Indicators Oversight Council conducted the first periodic review of currency market indicators (the official exchange rate of hryvnia to foreign currencies, the accounting price of investment metals and the reference value of the hryvnia to the U.S. dollar).

During the review, it was noted that, despite a significant decrease in activity in the foreign exchange market of Ukraine during the war compared to pre-war time, the volume of trading is quite sufficient to be able to calculate reliable exchange rates of hryvnia against the U.S. dollar (reference and official rates) according to the current methodology for determining them as a weighted average.

At the same time, this activity is not enough to consider in the foreseeable future the possible transition to the calculation of foreign exchange market indicators according to the fixation methodology.

The currency structure of transactions in the foreign exchange market of Ukraine confirms the status of the U.S. dollar as the main exchange rate-forming currency.

At the same time, in the segment of bank transactions with customers, the share of transactions in euros in the total volume since pre-war times tends to grow.

In particular, in terms of transactions for the purchase of cashless currency by customers, the share of transactions in euros in short terms approached 50%.

The continuation of this trend, taking into account the European integration aspirations of Ukraine, may in the near future actualize the question of the feasibility of moving from the dollar to the euro as the main currency of exchange rates.

And at the current stage, as noted by external members of the Oversight Council, market participants already feel the need to calculate the indicator of the reference value of the hryvnia to euro exchange rate as of 12 noon.

As Ukrainian News Agency earlier reported, from July 21, the NBU adjusted the official hryvnia exchange rate by 25% to 36.5686 UAH/USD.

Since August 6, 2022, the National Bank abolished the restriction, according to which banks and non-bank institutions had to buy cash currency from the population at a rate not lower than the official one.

The National Bank allowed banks to sell more currency to the public.

The National Bank has been implementing managed exchange rate flexibility since October 3.

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