What will happen to the dollar after the war: analysts have modelled the main scenarios
It is impossible to make an accurate forecast of the dollar exchange rate in Ukraine after the war. However, analysts were able to name the factors that will influence it. Depending on them, they were able to model several options for the behaviour of the currency market.
The formats of the end of the war and the country's recovery will be key to the post-war state of the hryvnia, says financial analyst Oleksiy Kushch. He considers two scenarios:
1. If Ukraine receives significant funds from its Western partners for reconstruction. "If these are really the figures we are asking for in Lugano or London, then the hryvnia will even strengthen, because there will be a very strong inflow of currency into the country," the economist explains.
2. If the format of the recovery is weak, meaning that Ukraine will receive funds only to cover domestic budget deficits. "Then the hryvnia will remain stable, but there will be no significant strengthening," Kushch said.
Economist Svyatoslav Chornyi also believes that it is difficult to predict what will happen to the dollar in Ukraine after the war. He identifies the following key factors affecting the exchange rate:
- economic growth;
- political stability;
- investor sentiment.
Thus, if the economy grows rapidly, investor sentiment remains strong, and post-war political stability is achieved, the hryvnia may strengthen against the dollar. However, in his opinion, the dollar will still remain more expensive than it was before the outbreak of the full-scale war.
As a reminder, the average annual exchange rate for 2023 is set at UAH 42.2 per dollar in the budget. And by the end of 2023, the dollar was expected to be at UAH 45.8.
However, Horizon Capital analysts believe that by the end of 2023, the dollar in Ukraine may rise to UAH 39 from the current UAH 37-38, and in 2024 - to UAH 42. Dragon Capital also forecasts the dollar to appreciate to UAH 39 by the end of 2023. Before the forecast was adjusted, experts expected the exchange rate to reach as high as UAH 43, which means that expectations improved by UAH 4 per dollar.
As reported by OBOZREVATEL, the dollar exchange rate in Ukraine will generally be in the price range of UAH 37-38 until 16 July. At the same time, the cash dollar will fluctuate near the lower boundary of this range (UAH 37/USD), periodically breaking it down towards the official exchange rate. Risks to the Ukrainian currency may emerge later.