The National Bank of Ukraine may consider the advisability of pegging the hryvnia exchange rate to the euro instead of the dollar in the near future.
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This was discussed during the first meeting of the Council of the Oversight of Indicators of the Money and Foreign Exchange Markets since the beginning of the full-scale invasion, which includes both representatives of the NBU and private banks.
The National Bank website reported that at this stage market participants already need to calculate an indicator of the reference value of the hryvnia to euro exchange rate.
Currently, the currency structure of transactions on the Ukrainian foreign exchange market confirms the status of the American dollar as the main exchange rate-setting currency. At the same time, in the segment of bank transactions with clients, the share of transactions in euros continues to grow.
In particular, for transactions involving the purchase of non-cash currency by clients, the share of transactions in euros came close to 50%. The continuation of this trend, taking into account Ukraine’s European integration aspirations, may in the foreseeable future raise the issue of the advisability of switching from the dollar to the euro as the main currency of the exchange rate peg, the NBU said in a statement.
Meanwhile, on March 28, the hryvnia exchange rate strengthened after falling to a historic low against the US dollar and the euro. Based on the results of trading on the interbank market on March 27, the National Bank set the official exchange rate of the hryvnia against the dollar on Thursday at the level of 39.2273 UAH per dollar. in comparison with the historical minimum recorded the day before at the level of 39.3430 UAH.
At the same time, the hryvnia exchange rate to the euro strengthened by 25 kopecks – to 42.4420 UAH per euro. A day earlier, it also dropped to a historical low of UAH 42.6911. per euro.
Let us recall that the National Bank announced the transition to a regime of managed flexibility of the hryvnia exchange rate from October 3, 2023, abandoning the fixed hryvnia exchange rate that had been in effect since the beginning of the full-scale Russian invasion of Ukraine on February 24, 2022. Under this regime, the official rate will be determined in the interbank market, and will not be set prescriptively by the National Bank. At the same time, the NBU will continue to monitor the situation and on an ongoing basis will compensate for the structural deficit of foreign currency in the interbank foreign exchange market.
Source: Racurs
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