The National Bank of Ukraine (NBU) has updated its official currency exchange rates for Monday, February 23. Following a recent sharp decline, the euro has stabilized, while the dollar remains steady.
Main Highlights:
- Official Rates: The NBU has set the dollar rate at 43.27 UAH, a slight increase of 1 kopeck, while the euro remains unchanged at 50.91 UAH.
- Historical Context: Ukraine has traditionally been tied to the dollar due to its primary export revenues, particularly in grain and metals, which are typically transacted in U.S. currency.
- Changing Dynamics: Export volumes of raw materials have decreased, leading to a reduced share of dollar transactions, while the role of the euro has significantly increased.
- Future Outlook: As Ukraine moves closer to EU membership, the NBU may reconsider its currency strategy, potentially shifting to an official exchange rate linked to the euro.
According to the NBU, the official dollar exchange rate for Monday will be 43.27 UAH, reflecting a minor increase. The euro, which was lowered by 34 kopecks to 50.91 UAH, will maintain this rate into the week.
Image: Currency rates for February 23 (infographic by RBC-Ukraine)
Why Does Ukraine Rely on the Dollar?
Economist Borys Kushniruk explained the historical reliance on the U.S. dollar and the emerging conditions for a potential transition to the euro. He noted that the NBU has consistently pegged the hryvnia to the dollar, with other currencies, such as the euro, pound, and franc, being secondary. The NBU adjusts their values based on their trading against the dollar in global markets.
Reasons for Longstanding Dollar Dependence:
- Exports: Ukraine’s key exports, including grain and metals, have always been traded in dollars on international markets.
- Imports: Most imported goods are also purchased in U.S. dollars.
Changes During the War:
The situation has begun to shift significantly:
- Decline in Raw Material Exports: Sales volumes for metals and agricultural products have decreased.
- Structural Changes: The dollar’s share in Ukrainian exports has diminished, while the euro’s share has increased.
Kushniruk suggests that the NBU’s policy may evolve. With increasing support in euros and the prospect of EU membership, it is plausible that Ukraine’s official currency formation could eventually be linked to the euro.
Note: This material is intended for informational purposes only and does not constitute financial or investment advice. Investments carry risks, including the potential loss of capital. RBC-Ukraine is not responsible for financial decisions made based on this material. It is advisable to consult a licensed financial advisor before making any investment decisions.
The National Bank of Ukraine has updated its currency rates, indicating a stabilization of the euro and a slight increase in the dollar. As Ukraine's economic landscape evolves, particularly with decreasing dollar reliance and increasing euro transactions, future currency strategies may shift towards the euro, especially with the prospect of EU membership.