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

Issue #2 - October 2025

The purpose of this review is to provide an analysis of the current situation on 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 currency market

International context

The second half of October was influenced by expectations of the next decision by the Federal Reserve Committee on the key policy rate. The previous 25 basis points cut in September was a result of the strategy to achieve 2% inflation. Then in September, the Fed began a cycle of easing, and at the October 29 meeting of the Committee, it decided to cut the key policy rate by 25 basis points to the range of 3.75-4%. As Fed Chairman Jerome Powell said at a briefing on October 29, the outlook for employment and inflation has not changed much since the September meeting, with labor market conditions deteriorating and inflation remaining slightly elevated.

Thus, the US economic outlook is somewhat worrisome for investors. However, optimism in the markets increased in late October, mainly due to messages from President Donald Trump regarding further cooperation with China. On October 29, Donald Trump said at the Asia-Pacific Economic Cooperation summit in South Korea that he believed the United States would “make a deal” with China and that it would be a “good deal for both sides.” Trump and Xi Jinping met on October 30. As a result, the US president said that the parties had agreed to reduce overall duties on Chinese goods from 57% to 47%, and China promised to continue exporting rare earth metals.

In general, the dollar strengthened against the euro in October on the back of the expected decision of the Fed Committee on the key rate and the plans announced by the White House for a meeting between Donald Trump and Chinese President Xi Jinping. So it's no surprise that on October 29, the EUR/USD rate held at 1.1630. This is actually an echo of positive market sentiment, driven by the Fed's policy easing and the expectation of an agreement between China and the United States. However, some pullback in the direction of a fall in the dollar remains possible in the near future, as the deteriorating situation in the US labor market may play against the dollar.

Meanwhile, in the EU, investors expect the European Central Bank (ECB) to keep interest rates stable at its meeting on Thursday, October 30. Later, the ECB will release preliminary GDP data for the third quarter and inflation data for October, but it seems that there are no surprises from the ECB, and the rate will remain at 2%.

In general, the picture for the EU is quite stable, although there are some reservations about further economic growth in the eurozone, in particular in 2026, amid new US tariffs on imports from Europe. The euro is also influenced by expectations about the development of trade relations between the US and China, and the actual outcome of negotiations between the two countries may contribute to some increase in the volatility of the EUR/USD pair.

In Ukraine, the dollar strengthened faster in late October than in global markets, where the EUR/USD exchange rate has shown a strengthening of the dollar from 1.1685 to 1.1630 since the beginning of October. It is worth noting that the scenario of a change in the Fed's key policy rate has already been priced into the international market, so this aspect will have the least impact on exchange rate fluctuations in the near future.

Domestic Ukrainian context

In October, the Ukrainian foreign exchange market saw a trend of devaluation of the national currency. Since the beginning of October, the hryvnia has been steadily weakening against the dollar: as of October 29, the official exchange rate reached 42.08 UAH/USD, while on October 1, the rate was 41.14 UAH/USD. Thus, the hryvnia has lost 2.28% in almost a month. The exchange rate on the cash market is also changing accordingly, with the average exchange rate in banks as of October 29 at UAH 42.25 per dollar.

Demand for foreign currency on the interbank foreign exchange market is growing, but the National Bank is in no hurry to increase interventions. In fact, we can state that the devaluation is being managed and is being carried out under the strict control of the NBU.

In October, Bloomberg reported on the IMF's position on the hryvnia exchange rate. The publication said that the Fund was putting pressure on the National Bank to conduct a controlled devaluation of the hryvnia. The IMF believes that devaluation will be a way to strengthen the financing of the state budget, but the NBU disagrees because of the high risks of inflation. Devaluation is indeed partially justified by the possibility of converting funds received from Ukraine's creditors and partners at a better rate, increasing the volume of state treasury revenues. However, a sharp devaluation would be a rather risky decision. At the moment, we are talking about a gradual weakening of the hryvnia exchange rate, which is fully controlled by the NBU.

In our opinion, the exchange rate fluctuations in October were influenced by three main factors: the strengthening of the dollar in global markets, increased demand for foreign currency from importers, including energy goods and equipment, and the need to be guided by the exchange rate parameters set in the draft new state budget for 2026. As a reminder, the document refers to an average annual hryvnia exchange rate of UAH 45.7 per dollar.

An important trend in October was a marked increase in demand for cash foreign currency from the population. There was also a noticeable increase in demand for dollars in September, when net purchases of foreign currency by households reached $382.7 million. The official figures for October are likely to be higher than those for September. Banks have noted an increased demand for non-cash purchases of foreign currency, which is also an important sign of expectations of further hryvnia devaluation.

The most important factors influencing exchange rate volatility are the war and news from the frontline, shelling of energy infrastructure, and the passage of the psychological mark of the exchange rate - the level in the cash market of more than UAH 42 per dollar.

The National Bank of Ukraine will act cautiously, traditionally adhering to its position of smoothing out significant market fluctuations and trying to maintain a certain balance in the interbank market. The main factors that will influence exchange rate changes are the balance of supply and demand in the market, the NBU's readiness to intervene, and the rhythmic flow of international aid. It is also important to know what the new arrangements with the IMF will be like, as it is known that IMF Managing Director Kristalina Georgieva plans to visit Ukraine to discuss a new loan package, which may amount to (but has not yet been officially confirmed) $8 billion.

US dollar exchange rate: dynamics and analysis

General characteristics of market behavior

In October, the dollar experienced slight fluctuations in the international market, and the US currency continued to strengthen in the Ukrainian market.

During the month, the exchange rate gradually went up: the average buying rate rose from UAH 41.01 to UAH 41.8, the selling rate from UAH 41.52 to UAH 42.25, and the official NBU rate from UAH 41.14 to UAH 42.08. The dollar is strengthening smoothly and steadily.

In October, the buying rate was in the range of UAH 41.0-41.77/$ on the cash market (weighted average rate), and the selling rate was in the range of UAH 41.38-42.15/$. At bank cash desks, the spread between the buying and selling rates grew throughout the month and in large retail banks amounted to UAH 0.45-0.6 per dollar at the end of October.

Key factors of influence

• International context. The dollar strengthened on global markets in October due to positive expectations of an October change in the Fed's key policy rate, which has a stabilizing effect on markets. Donald Trump's loyal rhetoric on cooperation with China is leading to the expected de-escalation of relations between the US and China, but the dollar's sustained strength is still in question.
• International aid and reserves. As of October 1, 2025, Ukraine's international reserves amounted to $46,518.6 million. The NBU has reserves to smooth out currency fluctuations, but gradual devaluation is already emerging as a fairly clear trend, so the NBU is in no hurry to flood the market with foreign currency to strengthen the hryvnia.

Forecast.

• Short-term (1-2 weeks): the basic range is UAH 41.80-42.70/$, but given the currency trend of late October, it is more likely that the hryvnia will gradually weaken than strengthen.
• Medium-term (2-3 months): 41.80-43.50 UAH/$. The situation will be partly influenced by the Fed's key rate cut, as well as the situation on the fuel and energy market and the new terms of trade between the US and China. However, as before, the most important factors affecting the hryvnia will be the military response to Russian aggression, the number of large-scale shelling by Russia and the amount of damaged infrastructure, as well as agreements with Ukraine's partners and creditors on aid in 2026.
• Longer-term (6+ months): The scenario of gradual hryvnia devaluation remains. Subject to the rhythmic flow of international aid, as well as the approval of a new program with the IMF, the benchmark is UAH 42.50-45.20/$ by mid-2026, taking into account the context of the situation in Ukraine and the continuation or cessation of hostilities along the front line.

Euro exchange rate: dynamics and analysis

General characteristics of market behavior

In October, the euro on the Ukrainian market moved toward appreciation in line with the domestic trend of hryvnia devaluation, taking into account the situation on global markets. While on October 1, the official euro exchange rate was at 48.3 UAH/€, on October 29 it was 48.98 UAH/€.

Key observations

Ø Exchange rate geometry:

o The euro selling rate in Ukraine moved in different directions in October, but after October 21, it took a steady upward course.

o The buying rate continues to move actively away from the selling rate, with the spread between the rates in banks growing and at the end of October in the range of UAH 0.8-1 per EUR.

Ø Supply and demand:

o Demand for cash euros in Ukraine initially fell during October, but after the trend of hryvnia devaluation became more clearly defined in the second half of the month, demand in the cash segment increased significantly.

o The spread between buying and selling euros, which is significantly different from the spread in the dollar segment, continues to grow, which indicates that banks and financial institutions are not confident in the stability of this currency: a high spread is always a payment for risk and high volatility.

Key influencing factors

• Global context: the decision to cut the Fed's rate in the near term creates conditions for the euro to strengthen, and the ECB's stable position on not changing the eurozone rate adds some stability to the slight fluctuations in the EUR/USD pair. However, “black swans” in the form of geopolitical challenges and new inflation data in the EU could shake the market balance.
• Domestic market: demand for cash euros is growing amid a general depreciation trend in the hryvnia, speculative transactions are also increasing, and the spread between the bid and ask rates is widening.

Forecast.

• In the short term (1-2 weeks), the euro is likely to remain in the range of 48.8-49.4 UAH/€, with the possibility of short exits to 49.7 UAH/€.
• Medium-term (2-3 months): Following the Fed's decision to cut the rate by 0.25 bp at the end of October, the euro may strengthen slightly on the international market, and exchange rate fluctuations in Ukraine will be in the range of 48.80-49.90 UAH/€.
• Longer-term (6+ months): the baseline scenario is a smooth rise in the euro to UAH 50.1-53.50/€ amid a weaker dollar and as a result of continued strong GDP growth in the EU and optimistic inflation data in the euro area.

Recommendations: dollar or euro - buy, sell, or wait?

USD/UAH

The dollar's strengthening in the fall of 2025 was driven by optimism about the start of a new phase of trade discussions between the US and China, as well as by the levels of fluctuations that the markets had set in advance due to the next stage of monetary policy easing in the US.

The dollar will now play a major role in the structure of savings, and it is advisable to continue buying it in tranches from time to time. However, for short-term gains, a partial exit from the dollar is also possible after a thorough analysis of the investment strategy.

Further strengthening of the dollar and a clear devaluation trend provide opportunities to generate a return on dollar investments. However, globally, in an unstable hryvnia environment, such an exit should be accompanied by additional security measures, such as strong capital preservation strategies and further hryvnia investments in liquid assets. For a medium-term strategy, it is advisable to keep the dollar as the basis of the currency portfolio.

EUR/UAH

The euro is showing an upward trend in the Ukrainian market, and the high level of fluctuations does not allow for a full assessment of future dividends from the purchase of assets in euros. In the medium term, the euro will strengthen against the US dollar. It is advisable for investors to hold 20-30% of their portfolios in euros, given the need to diversify their savings.

It is not advisable to sell the euro at current levels, as the projected growth potential shows levels above UAH 50/€ in the coming months. The euro can be a base currency for speculative transactions due to the high spread and more active exchange rate dynamics.

Overall strategy

The Fed's key policy rate cut and the latest US labor market data may lead to a weaker dollar. In the long run, the dollar will be supported by new agreements between the US and China, as they currently indicate a de-escalation of relations between the two countries. The euro will be supported by the ECB's data on inflation and GDP growth in its member states.

Investors should choose the dollar as their savings base for the near future, but regularly review their portfolio for diversification and the presence of other liquid currencies. The euro can be an important part of a portfolio, especially given the unstable situation in the United States and investors' uncertainty about further economic growth, as well as President Donald Trump's mixed statements that could provoke market outbursts.

There is a clear trend of hryvnia devaluation in the Ukrainian market, which gives investors good reason to invest in the dollar as a base currency and the euro as a currency for diversification and possible short-term and speculative transactions. A good strategy is to preserve savings by entering the dollar and increase the possibility of profitable earnings on exchange rate fluctuations in the euro. Given the high chances of the dollar strengthening in the Ukrainian market, the US dollar will remain the main means of preserving and increasing foreign currency investments in the long term.

This material has been prepared by analysts of the international multiservice product FinTech platform KYT Group 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 to update or supplement.

Users of this material should make their own risk assessment 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.

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