Hryvnia-denominated bonds vs foreign currency: what are the real benefits for Ukrainians?
2 May 11:07
Despite the expected moderate depreciation of the hryvnia to 45 hryvnia per dollar by the end of the year, hryvnia-denominated domestic government bonds (OVDP) remain more profitable than foreign currency deposits. The reasons are higher yields and the absence of taxation. Alexander Martinenko, head of the corporate analysis department at ICU, spoke about this in an interview with RBC-Ukraine, reports "Komersant Ukrainian".
The tradition of keeping savings in dollars remains strong among Ukrainians. But is it justified today? According to Oleksandr Martynenko of ICU, the answer is not so clear-cut.
“Yields on government bonds are currently more attractive than bank deposits, and hryvnia-denominated government bonds are more attractive than foreign currency deposits—especially if we take into account the expected weakening of the hryvnia,” the economist noted.
An additional argument in favor of government bonds is tax benefits. Unlike bank deposits and investments in mutual funds, government bonds are not subject to taxation, which significantly increases their real yield.
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Martynenko advises focusing on three currencies—the hryvnia, the dollar, and the euro—maintaining roughly equal allocations across them, depending on personal spending plans. In particular, for those planning trips to Europe, the euro allocation should be increased.
Among the tools for saving money, the economist highlights:
- OVDPs – the most attractive option due to higher returns and the absence of taxes;
- Bank deposits – a convenient and familiar tool, but with lower returns;
- Investment funds – offer additional opportunities but carry higher risks and are subject to taxation;
- Gold – can make up a small portion of a portfolio as a long-term store of value, but due to growing interest from private investors, its price is becoming increasingly volatile, and gold is less and less in line with the characteristics of a classic “safe haven.”
At the same time, ICU forecasts a moderate depreciation of the hryvnia—by approximately 6% since the start of the year, to 45 hryvnia per dollar by the end of 2026.
However, according to Martinenko, no sharp currency shocks are expected: the NBU’s international reserves will remain at around $50 billion, and the regulator will continue to support the market through interventions.
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