The hryvnia is getting more expensive, the dollar is getting cheaper. And not only because of trade wars
7 April 09:42
In the first quarter of 2025, the hryvnia strengthened by 1.4% against the US dollar, and the demand for currency from the population fell significantly, stopping at the lowest level in the last 12 months. This is stated in a post by the Chairman of the Verkhovna Rada Committee on Finance, Taxation and Customs Policy Danylo Hetmantsev, "Komersant Ukrainian" reports.
What indicators have marked the foreign exchange market this year
In the first quarter of 2025, the average official hryvnia to dollar exchange rate amounted to UAH 41.75 per dollar, including UAH 41.48 per dollar in March.
The official exchange rate as of March 31, 2025 is 41.48 UAH/USD. As of today, April 6, the hryvnia has appreciated slightly. The official exchange rate set by the National Bank is 41.3426 UAH/USD.
At the official exchange rate against the US dollar at the end of March 2025 (compared to December 31, 2024), the hryvnia appreciated by 1.4%.
At the average monthly official exchange rate (month to month), the hryvnia has been strengthening for the last two months: in February (plus 1.1%) and March (plus 0.5%).
How the NBU supported the exchange rate
In March 2025, the NBU’s net sales of foreign currency to support the exchange rate amounted to USD 2.62 billion, down from USD 3.06 billion in February and USD 3.76 billion in January. This is the smallest amount of interventions in the last six months.
The NBU’s sales of foreign currency on the interbank market have been declining for the third month in a row.
What’s happening on the interbank FX market
In March 2025, the volume of purchases and sales of foreign currency by banks on the interbank market – without the NBU’s participation – amounted to USD 3.05 billion, the highest since the beginning of the war.
The average value in 2024 was USD 2.46 billion.
The population bought less foreign currency
Against the backdrop of the hryvnia’s appreciation, households’ demand for foreign currency has fallen significantly. The balance of net sales of foreign currency to households in the cash and non-cash markets decreased to USD 0.72 billion, down from USD 0.96 billion in February and USD 1.48 billion in January. This is the lowest level in the last 12 months.
What influenced the situation with the dollar
The hryvnia’s moderate appreciation against the US dollar was driven by the following factors
– the weakening of the US currency against major world currencies (euro, yen, and Swiss franc to their lows over the past six months) as a result of the unfolding trade war and a decline in confidence in the US dollar as a safe haven
– significant amounts of international aid to Ukraine in March.
According to Danylo Hetmantsev, the situational stabilization in the foreign exchange market is reflected in a noticeable decrease in interventions to support the exchange rate on the interbank market, a decrease in demand for foreign currency from the population and the highest sale of foreign currency on the interbank market without the NBU’s participation since the beginning of the war. According to the MP, these trends should somewhat improve currency and inflation expectations, as well as have a positive impact on curbing inflation in the coming months.
As a reminder, in December 2024, inflation accelerated to 12% year-on-year, exceeding the NBU’s previous forecast in the October 2024 Inflation Report.
Inflation will peak in the second quarter of this year and begin to decline in the middle of the year. This is stated in the January 2025 Inflation Report. Thanks to the exhaustion of temporary factors of price pressure and the NBU’s interest rate and exchange rate policy measures, inflation will slow to 8.4% in 2025 and to the target of 5% in 2026.
