The Dollar at 45 Hryvnias: Why Ukraine’s Currency Is Weakening and What to Expect by Year-End

Ukraine’s foreign exchange market began the week with two notable developments: the official US dollar exchange rate surpassed 45 hryvnias for the first time in history, while the euro fell to its lowest level since April. This movement has once again drawn attention to the state of Ukraine’s currency market and the National Bank of Ukraine’s ability to maintain exchange rate stability.

One of the key reasons behind the hryvnia’s weakening is the growing trade deficit. Ukraine imports more goods than it exports, while its ability to generate foreign currency revenue from international trade is declining. In particular, Russia’s blockade of maritime ports has placed significant pressure on exports, restricting the supply of Ukrainian products to foreign markets.

Another contributing factor is the effective shutdown of a substantial part of the metallurgical industry. Metallurgy has traditionally generated significant export revenues for Ukraine. As production and overseas shipments decline, the inflow of foreign currency decreases, further widening the imbalance between supply and demand in the domestic market.

At the same time, the defense sector’s demand for imported components is increasing. Some international funding is being allocated to domestic defense contracts, but Ukrainian companies need to purchase growing quantities of components abroad to manufacture weapons and ammunition. This increases demand for foreign currency and puts additional pressure on the hryvnia.

According to analysts, the dollar could gradually rise to 45.5-46.6 hryvnias by the end of 2026. However, this scenario is not inevitable. Future exchange rate movements will largely depend on the volume of international financial assistance, export performance, import demand, and the monetary policy of the National Bank of Ukraine.

Nevertheless, the currency market outlook is not limited to the risk of further hryvnia depreciation. According to Forbes Ukraine, if Ukraine receives the promised external financing in full, the National Bank’s international reserves could begin to grow. This would give the regulator greater capacity to smooth sharp exchange rate fluctuations, potentially allowing the dollar to weaken instead.

The historic threshold of 45 hryvnias per dollar therefore reflects not only current demand for foreign currency but also deeper challenges facing the Ukrainian economy: declining export revenues, rising import needs, and dependence on international financial support. By the end of the year, a key factor for the exchange rate will be Ukraine’s ability to secure a stable inflow of external financing and maintain sufficient foreign exchange reserves to keep the market balanced.