Overview and forecast of the hryvnia exchange rate against key currencies from KYT Group analysts

Issue #2 - August 2025

The purpose of this review is to provide an analysis of the current situation in the Ukrainian currency market and a forecast of the hryvnia exchange rate against key currencies based on the latest data. We analyze current conditions, market dynamics, key influencing factors, and likely scenarios.

Analysis of the current situation on the Ukrainian currency market

In the second half of August, a number of important signals from global markets confirmed that the hryvnia exchange rate increasingly depends not on local factors, but on international news and the state of the world's leading economies and the decisions of their central banks.

Domestic factors remain rather short-term impulses, capable of producing slight spikes but not changing the overall trajectory.

International context

In the United States, July data showed a slowdown in inflation and a cooling of the labor market. This took some pressure off the dollar and increased expectations that the Federal Reserve could cut rates as early as September. The Fed chairman explicitly acknowledged that the policy will have to be reviewed in order not to “overstretch” the economy. As a result, the dollar weakened slightly, and stock markets got a chance for additional optimism.

Given the expectations of the Fed's rate revision actions, different scenarios should be considered for key currency pairs.

If the Fed cuts rates in September:

• EUR/USD: the euro will get an upward push, and the market may reach 1.19-1.20.
• USD/UAH: the dollar in Ukraine will weaken to the lower end of the range, around 41.20-41.40 UAH/$.
• EUR/UAH: The rise of the euro against the dollar will also pull up the hryvnia, with a possible move towards 49.00-49.20 UAH/€.

If the Fed leaves the rate unchanged:

• EUR/USD: the dollar will retain its advantage, and the pair may drop back to 1.14-1.15.
• USD/UAH: The dollar in Ukraine will remain close to the middle or upper limit of the forecast corridor - 41.70-42.00 UAH/$.
• EUR/UAH: The euro will be under pressure and is likely to fluctuate in the range of 48.20-48.60 UAH/€, with no clear upward trend.

The European economy looks sluggish: growth is almost imperceptible, inflation is stable at 2%, and there are no new drivers for the euro. This keeps the currency in a neutral mode - no reason for a breakthrough, but no prerequisites for a sharp fall.

The UK was the first major economy to cut its interest rate. This signaled to the world that the period of tight monetary policy is coming to an end. If the United States confirms a similar move, the yield differential between currencies will decrease, and the dollar will lose some of its advantage.

Oil and gas prices remained relatively calm in August. This means that there is no additional pressure on the US and European economies due to energy. For the euro, this is even more of a disadvantage, as the argument for a tighter ECB policy disappears.

In general, the international backdrop looks like this: The dollar has temporarily lost some of its support, and the euro is hovering on the sidelines.

For the hryvnia, this means relatively stable conditions.

Domestic Ukrainian context

The NBU's reserves remain high, even after significant interventions and external debt repayments. This creates a safety margin to smooth out exchange rate fluctuations.

In July, inflation eased to 14.1% year-on-year, and the monthly figure showed deflation for the first time in two years. This calmed the market and reduced the “insurance premium” in prices.

External support is coming in as planned: at the end of August, the next tranche of more than €3 billion under the Ukraine Facility program and €1 billion from the proceeds of frozen Russian assets under the G7 Extraordinary Revenue Acceleration for Ukraine (ERA) initiative were disbursed. This is an important stabilizing factor for both the budget and the FX market.

The NBU has also taken steps to liberalize the currency by allowing the repatriation of dividends and expanding hedging instruments. This creates a more predictable environment for business without putting any additional pressure on the exchange rate.

In general, the Ukrainian FX market is entering September in a calm mode: reserves are sufficient, inflation has cooled, and external funds are coming in at the right level.

Internal factors are rather short-term spikes, but the exchange rate will be determined by statements, events, and decisions from Washington and Brussels.

US dollar exchange rate: dynamics and analysis

The general characteristic of market behavior is a smooth decline without sharp impulses

August confirmed the trend of gradual depreciation of the dollar against the hryvnia.

• On a monthly basis, all indicators showed a smooth slide: the buying rate dropped from ~41.45 to 41.05 UAH/$, the selling rate from almost 42.00 to 41.60 UAH/$, and the official NBU rate from 41.73 to 41.26 UAH/$.
• On a weekly basis, the market stabilized at the low end of the range: after a brief rebound on August 26-27, quotes returned to a steady decline, with no signs of a new trend toward hryvnia appreciation or depreciation.
• The bid-ask spread has remained steady in a narrow range of UAH 0.40-0.50, and market rates remain equidistant from the official rate. This indicates a lack of nervousness and support for the “exchange rate consensus” between the market and the regulator.

Domestic demand remains restrained: importers are working as planned, households are mainly focused on the euro, and the NBU is keeping the exchange rate in balance without any sudden movements.

Key influencing factors:

• International background: markets are waiting for the Fed's decision in September, so the dollar is globally “paused”. This reduces volatility in Ukraine as well.
• NBU reserves: remain sufficient to smooth out fluctuations.
• Supply/demand: There are no signs of abnormal import or consumer waves, so dollar liquidity in the market is balanced.
• Behavioral factor: the population does not create a rush demand for the dollar, which additionally keeps this segment of the FX market stable.

Forecast:

• Short-term (1-2 weeks): the basic range is 41.20-41.70 UAH/$. The market is unlikely to go below 41.00 without a strong external signal.
• Medium-term (2-3 months): 41.50-42.20 UAH/$. The Fed's likely September decision could set the momentum in either direction: if the rate is cut, the hryvnia could strengthen in the short term and the dollar could fall to the lower boundary; if it is maintained, quotes will remain closer to the upper boundary.
• Longer-term (6+ months): the scenario of a smooth devaluation remains: the expected benchmark is UAH 43.00-44.50/$, provided that foreign aid is stable and the NBU's policy is controlled.

Euro exchange rate: dynamics and analysis

General characteristics of market behavior

The end of August showed more volatility for the euro than for the dollar. During the week, the exchange rate initially declined (to lows of ~47.80 UAH/€ on the buy side and ~48.40 UAH/€ on the sell side on August 27-28), but recovered to the level of 48.20-48.60 UAH/€ at the end of the period (August 30-31). It was a technical rebound that was synchronized with movements in the EUR/USD pair on the global market after the Fed chairman's statement.

Prior to the news from the US, the market had recorded a stabilization in the euro after the previous decline, but there were no drivers for a new trend or significantly different levels from the current target levels.

Key influencing factors

• Global cues: The Fed's hint of a possible rate cut pushed the euro to a short-term recovery against the dollar and hryvnia.
• Domestic market: demand for cash euros has cooled after the summer overheating, and speculative transactions are declining. This slowed down sharp fluctuations and reduced pressure on the spread.
• Spread: for most of the month, it remained in the range of UAH 0.50-0.70/€, but during the correction in the second half of August, it fell closer to UAH 0.40-0.50/€. This is a sign that market operators feel the balance of supply and demand and do not set additional risk premiums.

Forecast.

• In the short term (1-2 weeks): the expected range is 48.20-48.90 UAH/€. If the market receives new weak data from the US, there may be short attempts to reach 49.00 UAH/€.
• Medium-term (2-3 months): likely to balance in the range of 48.50-49.80 UAH/€, depending on the September Fed decision. A rate cut in the US will boost the euro, but keeping rates on hold will keep it on the sidelines.
• Long-term (6+ months): the baseline scenario is UAH 49.00-51.00/€ with episodes of volatility in the event of new US-EU trade agreements or changes in ECB policy.

Recommendations: act in ranges, keep liquidity, hedge risks

Key universal ideas:

• On the short term: The USD is holding close to the lower boundaries of the band, with no reason for a sharp strengthening; the EUR is more of a sideways pair with short rebounds possible.
• Liquidity over profitability: keep a stock of free currency for current needs, and hold term instruments only with an early access option.
• A universal strategy for everyone - flexibility, division of operations into parts, hedging.
• Plan in ranges, not in points: in calculations, you should focus on a “corridor” rather than a specific number.
• Keep an eye on spreads: their narrowing is a moment to optimize purchases/sales, while their widening is a signal to slow down.
• Risk management: Avoid large transactions and long-term commitments, especially amid rumors and news - in a phase of relative calm, information injections often swing expectations without a real basis.

For private investors and savers:

• USD is the basis of stability, EUR is flexible: the dollar remains the “anchor” of the portfolio, and the euro can be added in small tranches after correction.
• Don't chase the “peaks”: the market is mostly sideways now, so distribute the exchanges gradually.
• The hryvnia is only for current expenses: a reserve of 1-2 months of current needs is enough, and the surplus should be kept in hard currency or currency-linked instruments.

For speculative operations on USD/UAH and EUR/UAH:

• This is the time for short positions and quick profit-taking in small portions.
• Watch for “intersections” between official and market rates: sharp jumps and narrowing spreads often mean a technical delay and a quick “catching up” of the market.

• Take care of liquidity: avoid large transactions at times when there are few offers and a wide gap between rates; do not hold large positions before the release of key macro data.

This material was prepared by the company's analysts and reflects their expert, analytical professional judgment. The information presented in this review is for informational purposes only and cannot be considered as a recommendation for action.

The Company and its analysts make no representations and assume no liability for any consequences arising from the use of this information. All information is provided “as is” without any additional warranties of completeness, obligations of timeliness or updates or additions.

Users of this material should make their own risk assessments and informed decisions based on their own evaluation and analysis of the situation from various available sources that they consider to be sufficiently qualified. We recommend that you consult an independent financial advisor before making any investment decisions.

REFERENCE

KYT Group is an international multi-service product FinTech platform that has been successfully operating in the non-banking financial services market for 16 years. One of the company's flagship activities is currency exchange. KYT Group is one of the largest operators in this segment of the financial market of Ukraine, is included in the list of the largest taxpayers, and is one of the industry leaders in terms of asset growth and equity.

More than 90 branches in 16 major cities of Ukraine are located in convenient locations for customers and have modern equipment for the convenience, security and confidentiality of each transaction.

The company's activities comply with the regulatory requirements of the NBU. KYT Group adheres to EU standards, having a branch in Poland and planning cross-border expansion to European countries.