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Ukraine may "abandon" the dollar: what currency will be used to calculate the hryvnia exchange rate

Roman KostyuchenkoNews
The NBU is considering pegging the hryvnia to the euro
The NBU is considering pegging the hryvnia to the euro. Source: Pixabay/moerschy

The NBU is considering pegging the hryvnia exchange rate to the euro instead of the dollar. The reason is the growing share of foreign exchange transactions in the country in euros.

It was reported by the regulator. They noted that:

  • so far, the currency structure of transactions in the foreign exchange market of Ukraine confirms the status of the dollar "as the main exchange rate currency";
  • however, the issue of the expediency of switching from the dollar to the euro as the main currency of the exchange rate peg may be actualized "soon".

It is emphasized that the share of transactions in euros in non-cash foreign currency purchase transactions by clients is already close to 50%. And "market participants already need to calculate the indicator of the reference value of the hryvnia to the euro on the interbank market as of noon."

"The continuation of this trend, taking into account Ukraine's European integration aspirations, may soon raise the issue of the feasibility of switching from the dollar to the euro as the main currency of the exchange rate peg," the report says.

The NBU has already expanded the use of the euro

At the same time, the NBU has already made changes to the publication of external sector statistics, which will now be provided in euros and hryvnia. Previously, all data was presented in dollars. They noted that:

  • this practice is consistent with Ukraine's European integration progress;
  • the expansion of data publications reflects "the high share of euros in external transactions, which is still growing."

"Almost all developing countries of the European Union publish data on the main products of external sector statistics in euros. Expanding the publication of external sector statistics in euros and national currency is a best practice for candidate countries. Thus, the candidates for EU accession, which acquired this status by 2022, have already started publishing data in euros (except for Turkey)," the NBU said.

It is emphasized: The NBU wanted to start publishing external sector statistics in euros and hryvnia as early as 2022. However, this was prevented by the outbreak of a full-scale war.

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