Ukraine is considering weakening the peg of its national currency to the US dollar and strengthening its orientation towards the euro. Such a decision is due to both the destruction of global supply chains and deepening of economic cooperation with the European Union.
This was reported by Reuters with reference to an interview with the publication by the head of the National Bank of Ukraine, Andriy Pyshnyy.
The NBU chairman emphasized that the transition to the new currency peg is a complex process that requires serious preparation and participation of various parties.
"Potential accession to the European Union, strengthening the role of the EU in ensuring our defense capabilities, greater volatility in world markets and the likelihood of fragmentation of global trade make it necessary to consider whether to choose the euro instead of the US dollar as the reference currency for the hryvnia," Andriy Pyshnyy noted.
The publication reminds that despite the fact that the dollar still dominates global trade and forms the basis of most currency reserves, its position began to raise doubts since Trump's return to the White House, when the dollar index fell by more than 9% against a basket of key currencies. At the same time, investors began to reduce their investments in U.S. assets. However, some experts point out that the strength of the dollar is largely related to the political and military alliances of the United States, and not only to its economic stability.
In this regard, the head of the National Bank said that the dollar continues to dominate in Ukraine.
"Transactions in US dollars continue to dominate in all segments of the foreign exchange market, although the share of Euro currency transactions in most segments is moderately growing," Pyshnyy added.
However, he said, rapprochement with Europe and economic recovery may contribute to a moderate acceleration of GDP growth to 3.7-3.9% over the next two years. At the same time, the pace of recovery will largely depend on the situation on the front.
"A quick end to the war would certainly be a positive scenario with good economic consequences if it is accompanied by security guarantees for Ukraine. However, it should be realized that the economic benefits of ending the war may manifest themselves slowly," the banker said.
Pyshnyy also said that Ukraine expects to receive $55 billion in international aid this year to cover its budget deficit and create a financial reserve. These funds will become the basis for sustainability in the following years, when the volume of external support is expected to decrease. At the same time, according to his forecasts, Ukraine will receive about $17 billion in 2026 and $15 billion in 2027.