Ukraine is studying the possibility of switching to the euro as the main currency for exchange rate peg

NBU Governor Andriy Pyshny said in an interview with Reuters that the National Bank of Ukraine is considering pegging the hryvnia to the euro instead of the US dollar.

According to Pyshny, the factors behind this consideration are the likely accession to the European Union, the strengthening of the EU’s role in the defense sector, growing volatility in international markets, and the risks of fragmentation of world trade.

He noted that while the US dollar remains the dominant currency in the Ukrainian foreign exchange market, the share of transactions in the euro gradually increases. However, this trend is currently “moderate”. Pyshny stressed that changing the currency reference point is complex and will require detailed preparation.

Since the introduction of the hryvnia in 1996, the US dollar has served as the basis of monetary policy in Ukraine. After the start of the Russian Federation’s full-scale aggression in 2022, the NBU set the hryvnia exchange rate at approximately 29 to the dollar, and in October 2023, it switched to a managed flexibility regime, keeping the dollar as the main reference for currency interventions.

Pyshny also forecasted the economy’s growth at 3.7–3.9% in the next two years. This growth will be driven by increased investment, consumer activity, and closer ties with the EU. However, he noted that the situation on the front remains a critically important factor.

“A quick end to the war with reliable security guarantees could significantly improve economic indicators,” he noted, emphasizing that achieving these results takes time.

In the context of international financing, Pyshny reported that Ukraine expects to receive about $55 billion in aid this year. These funds will help cover the budget deficit and create reserves for the coming years, approximately 17 billion in 2026 and 15 billion in 2027.

Despite the decline in the dollar’s value on international markets caused by changes in the geopolitical situation, the NBU continues to carefully monitor the structure of the foreign exchange market and changes in its participants’ behavior.

The dollar exchange rate in Ukraine is still subject to fluctuations associated with political events in the United States and negotiation processes in the international arena. It is noted that after President Volodymyr Zelensky’s meeting with Donald Trump, increased demand was recorded in exchangers.