Stable Exchange Rate: How Long Will It Last?

In May 2026, the hryvnia-to-US-dollar exchange rate was influenced by several factors, with the NBU’s tight monetary policy, accelerating inflation, strong demand for foreign currency from importers and external price risks playing a key role. During the month, the hryvnia fluctuated: it was strongest when the US dollar fell to UAH 43.80/$, and weakest when its value reached UAH 44.30/$ — on 8 and 28 May 2026, respectively. The key policy rate of 15% supported the attractiveness of hryvnia-denominated instruments and restrained excessive movement of funds into foreign currency. At the same time, high inflation, rising energy prices and growing imports created persistent depreciation pressure, as businesses and households needed more foreign currency for payments and savings.

An important factor supporting stability was the National Bank’s foreign currency sales and international financial assistance. The regulator continued to actively smooth market fluctuations, selling an average of $700–800 million per week.

The need for such operations is primarily explained by the deterioration of the foreign trade balance. In March 2026, imports of goods amounted to $9.5 billion, while exports totalled only $3.5 billion, resulting in a monthly deficit of around $6 billion. In the first quarter, imports reached $32.2 billion compared with $13.9 billion in exports. As a result, sustained demand for foreign currency from importers significantly exceeds export revenues, and the difference has to be covered through reserves and external financing.

The increase in demand for foreign currency that is typical at the end of spring and beginning of summer due to the tourist season, import purchases and seasonal business needs did not lead to a rush this year. Overall, the hryvnia remained under moderate pressure, but the situation on the foreign exchange market remained under control thanks to the regulator’s actions and regular external inflows.

Another challenge in May was a sharp increase in oil prices following the escalation of the conflict in the Middle East. Rising energy prices increased concerns about accelerating global inflation and created risks of further fuel price increases in Ukraine. For a country that is heavily dependent on energy imports, this means an additional need for foreign currency. At the same time, the absence of new large-scale military escalations around Ukraine partially offset this negative impact and supported market sentiment.

Despite the war-related risks, the Ukrainian labour market continues to show signs of a labour shortage. According to the NBU, the average annual unemployment rate fell to 11.3% in 2025 from 13.1% a year earlier, while a shortage of workers in many sectors of the economy is contributing to rapid wage growth. By spring, the average salary had already exceeded UAH 30,000, with wage growth outpacing inflation. Rising household incomes support consumer spending, including purchases of imported goods and foreign travel, which indirectly increases demand for foreign currency. This effect traditionally becomes particularly noticeable in summer.

At the same time, some of this pressure is being eased by slowing migration and a gradual decline in the amount of money transferred abroad. In other words, rising household incomes stimulate demand for foreign currency, while the reduction in certain channels of capital outflow partially offsets it.

A persistent challenge for the hryvnia is the chronic trade deficit. Even significant international inflows cannot fully eliminate the imbalance between imports and exports. In particular, assistance under the Ukraine Facility programme, amounting to €2.8 billion, is an important source of support for the budget and international reserves and reduces current pressure on the foreign exchange market. However, it does not eliminate the structural causes of the foreign trade deficit. In addition, each tranche depends on Ukraine fulfilling the agreed reforms, so the timing of the funds’ arrival may change.

Potential reparations should not be overestimated either. Despite the significant amounts theoretically involved, they are not yet a resource that can be relied on in the short term. Therefore, international assistance, loans from partners, financial support programmes and the NBU’s actions will continue to be the main sources for covering the external imbalance.

The updated economic growth forecast of 1.3% may indicate more restrained business activity and somewhat weaker demand for imports and, consequently, foreign currency. However, this factor is unlikely to have a decisive impact on exchange rate dynamics as early as June. Much more important for the market will be the volume of international assistance, the state of foreign trade, the National Bank’s policy and the security situation. Inflation at 8.6% supports interest in foreign currency savings among the population, but in the absence of strong depreciation expectations, this factor is not currently creating critical pressure on the market.

In June, the hryvnia exchange rate will primarily depend on the balance between foreign currency supply and demand. Demand will be supported by fuel imports, purchases of energy equipment, seasonal business activity and overall uncertainty related to the war and external risks. On the supply side, foreign currency revenues from the agricultural sector, international financial assistance and expectations of new inflows from partners will provide support. The market does not currently expect a significant decline in agricultural exports, as the projected wheat harvest is close to last year’s level, although some segments of industrial exports remain vulnerable.

At the beginning of summer, traditional factors — corporate settlements, import payments and preparations for the holiday season — are joined by high energy risks. Tensions in the Middle East are keeping oil prices elevated and sustaining global inflationary pressure. For Ukraine, as an energy importer, this means additional risks of increased demand for foreign currency.

Therefore, the most likely scenario for June remains managed exchange rate stability. At the same time, any escalation in energy markets, disruptions to export logistics or delays in international financing could quickly change the balance on the foreign exchange market and increase pressure on the hryvnia.

Translation into English was created with the help of artificial intelligence.