46 UAH per dollar is not the bottom: what to expect from the national currency by the end of the year
20 March 2025 14:54
OPINION
The Ukrainian Institute for the Future (UIF) has published the “Macroeconomic Digest of Ukraine March 2025”, in which it forecasts that by the end of 2025 the official hryvnia exchange rate to the dollar will be 46 UAH/USD, "Komersant Ukrainian" reports.
The Institute acknowledges that the hryvnia exchange rate in February was better than expected by its experts. They had predicted a rate of about 42 UAH per US dollar, but it amounted to about 41.5 UAH/USD. However, the UIF has a suitable explanation.
“We believe that the NBU has now moved to actively curb inflation by maintaining the national currency. At the same time, we also believe that the exchange rate is set taking into account the dollar and euro currency basket. The strengthening of the euro from 1.03 to 1.08 to the dollar leads to the strengthening of the hryvnia against the dollar,”
– the digest says.
The UAF believes that the current strengthening of the hryvnia is a temporary phenomenon. Moreover, experts say that the final figure will be higher than the average annual exchange rate of 45 hryvnia to the dollar expected by the National Bank.
“The fundamental factors of the deteriorating balance of payments in 2024 will push the national currency to devalue at the rate of 46 hryvnia to the dollar by the end of 2025,”
– uAF believes.
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Experts’ comments
Economist Oleh Hetman strongly disagrees with the UIF forecast and believes that it is not true at all. After all, the macrofinancial situation for Ukraine has not changed much.
“We continue to receive about $30-35 billion a year through various macro-finance programs, the Ukraine Facility, IMF loans, etc. This allows us to completely cover the negative trade balance that we have, approximately minus 30 billion. Therefore, macro factors indicate that the hryvnia will be stable, quite strong, and will fluctuate slightly in line with the NBU’s vision,”
– explains the expert in an exclusive commentary .
According to Mr. Hetman, the NBU has its own reasonable goals for the exchange rate policy. And this policy is aimed at fulfilling the forecast that was included in the state budget, namely an average annual exchange rate of 45 UAH per US dollar.
“In recent years, the National Bank has not even reached the figure that the Cabinet of Ministers has budgeted for. The NBU is trying to balance the hryvnia and adjust inflation. The inflation rate they need to reach is about 5%. That is why the NBU is holding the hryvnia very tightly to reach the 5% inflation target,”
– he emphasizes.
The economist is confident that the regulator will have to maintain a stronger hryvnia to achieve its inflation targets. This gives him reason to expect a much better exchange rate than even the NBU’s forecast.
“In order to reach [the inflation target], the hryvnia should be kept at around 42-42.5 and 43 at most. So, most likely, by the end of the year we will see something like 43 UAH/USD plus or minus 5%,”
– mr. Hetman predicts.
He also recalled additional sources of foreign exchange earnings that will contribute to the stability of the national currency.
“In addition, we have a program where we receive funds from frozen Russian assets, totaling 50 billion, 25 billion this year and 25 billion next year. So, we don’t have a shortage of currency, we have a surplus of currency, and our balance of payments will be positive this year,”
– the expert concludes.
Economist Oleh Pendzin, on the other hand, believes that budget figures may indicate other trends that make the UIF forecast quite adequate.
“The budget sets an average annual exchange rate of 45 UAH/USD. From elementary school arithmetic, we know that the average annual rate of 45 means that if we started the year with a rate of 42, then at the end, roughly speaking, it should be 47 UAH/USD. Maybe even a little more. That is, theoretically, based on the budget figures, this should be the exchange rate,”
– pendzin says exclusively for 
.
However, in his opinion, the specifics of the Ukrainian currency market make any forecasts conditional.
“We do not have a foreign exchange market in Ukraine. We have essentially one seller on the currency market. He is the regulator, he determines the rules of the game, he is the National Bank of Ukraine. Imagine if you set the rules of the game and play by them, can you imagine losing? Hardly!”
– the expert is ironic.
According to him, the exchange rate policy is closely linked to Ukraine’s international obligations. And the average annual exchange rate of 45 hryvnias to the dollar is a figure agreed upon, in particular, with the IMF. The economist believes that only force majeure circumstances can significantly change the exchange rate trend.
“Unless another “black swan” arrives. Or TRUMPonomics will start to manifest itself in relation to Ukraine. But if there are no black swans, then somewhere, plus or minus, there will be a figure that we are not talking about now,”
– the expert concludes, meaning, obviously, that the UIF forecast is quite realistic, and perhaps even somewhat underestimated.
So all we can say for sure is that the exchange rate will not get better. Most likely, it will gradually decline, and the NBU will try to counteract this. The good news is that, according to experts, the hryvnia exchange rate will not go beyond the range predicted by the National Bank.
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