Throughout August, the hryvnia remained relatively stable. In the first half of the month, the official dollar exchange rate mostly stayed around UAH 44.7/$, while at the end of August the hryvnia strengthened slightly. As of August 31, the official NBU exchange rate was UAH 44.5505/$.
At the same time, August cannot be described as a month of complete balance in the foreign exchange market. According to foreign currency sales data, the regulator has been selling more than $1 billion on the interbank market for several weeks in a row. In the first week of August — August 3–7 — net sales amounted to around $1.02 billion, on August 10–14 — $1.10 billion, on August 17–21 — around $1.19 billion, and on August 24–28 — already $1.27 billion. As a result, total NBU foreign currency sales in August reached $4.816 billion.
The main source of demand remained the needs of the real economy. This primarily concerns imports of energy resources, fuel, equipment, technology and other goods necessary for the functioning of the economy and infrastructure recovery. Budgetary and defence spending also affects the foreign exchange market.
Ukraine is entering the autumn-winter period, which means an increase in demand for imports of fuel, energy resources and equipment. In wartime conditions, this factor is particularly important due to the need to prepare energy infrastructure for the heating season and possible new attacks.
Export logistics became an additional risk in August. Due to Russian attacks on port infrastructure, Ukraine's maritime export capacity has been significantly reduced. This has been particularly noticeable in grain shipments. At the end of August, due to delays near the Sulina Canal, a queue of around 80 vessels formed. Due to logistics problems, Ukraine exported only 539,000 tonnes of grain between August 1 and 21 — three times less than during the same period last year (1.73 million tonnes).
For the foreign exchange market, not only the volume of exports matters, but also how quickly export proceeds return to the country. Logistics delays can postpone foreign currency inflows and temporarily increase the structural deficit in the domestic market. This means that problems with export logistics may affect the supply of foreign currency not only in the short term but also in September.
Under these conditions, the regulator continues its policy of managed flexibility. The hryvnia exchange rate is not fixed at a specific level but is determined by supply and demand. The NBU enters the market when it needs to compensate for a structural foreign currency deficit or smooth excessive and potentially destabilising fluctuations.
At the same time, exchange rate stability is largely ensured by the NBU's active participation rather than by a complete balance between supply and demand. As of August 1, Ukraine's international reserves stood at $51.2 billion, equivalent to 4.2 months of future imports. In July, reserves declined by only 0.1%, despite the NBU selling around $4.76 billion on the foreign exchange market. A significant part of the pressure was offset by international financing inflows.
This level of reserves gives the NBU sufficient room to continue selling foreign currency. At the same time, in September, an important factor will be the balance between the regulator's foreign currency sales and international financing inflows.
Another important element of monetary policy remains the key policy rate. At the end of July, the NBU raised it to 15.5% per annum. On September 17, the NBU will make its next decision on the key policy rate.
A high key policy rate supports the attractiveness of hryvnia-denominated assets, primarily deposits and domestic government bonds. This helps prevent savings from shifting into foreign currency and supports demand for the hryvnia.
At the same time, the inflationary environment remains a factor that the NBU will closely monitor in September. In July, consumer inflation increased to 7.7% year-on-year, while core inflation rose to 8.1%. The NBU noted that actual headline inflation was slightly above the path projected in its July forecast.
This means there is currently little room for rapid monetary policy easing. In September, the regulator will most likely focus heavily on the balance between inflation risks, exchange rate dynamics and conditions in the foreign exchange market.
September will be a busy month in terms of decisions by major central banks. The ECB will hold a meeting on September 10, while the FOMC of the US Federal Reserve will meet on September 15–16.
The Fed's decision will be particularly important for Ukraine. Following Kevin Warsh's speech on August 28, market estimates of the probability of a Fed rate hike in September rose from around 35% to more than 55%, and exceeded 65% on August 31. At the same time, the final decision will depend on new inflation and labour market data. The dollar strengthened at the end of August, while US Treasury yields rose. On August 31, the 10-year Treasury yield exceeded 4.75%, and markets began paying significantly more attention to inflation risks.
However, on September 1, the dollar weakened somewhat, so rather than a clear global trend towards continued dollar strengthening, we can speak of increased volatility and the risk of a stronger dollar if the Fed adopts a more hawkish scenario.
For Ukraine, this means an additional external risk factor. Dollar dynamics in global markets affect the euro/dollar pair and, through it, the euro/hryvnia exchange rate. Therefore, changes in the global dollar can affect not only the hryvnia/dollar pair but the entire foreign exchange market.
The situation with the euro is further complicated by accelerating inflation in the eurozone. In August, annual inflation increased to 3.3%, compared with 2.9% in July, significantly exceeding the ECB's 2% target. This increases market attention to the European regulator's future decisions and reduces room for rapid monetary policy easing. Therefore, the dollar/euro relationship may change in September.
Energy prices remain another risk factor. At the beginning of September, Brent crude exceeded $91 per barrel. For Ukraine, more expensive oil means higher import costs for fuel and additional demand for foreign currency. At the same time, high energy prices may increase inflationary pressure globally and support tighter policies by major central banks.
In September, the main pressure on the hryvnia will come from consistently high demand for foreign currency from importers, budgetary and defence needs, seasonal growth in energy-related spending and risks to export logistics.
At the same time, high international reserves, international financing and the NBU's readiness to actively intervene in the market give the regulator sufficient capacity to smooth excessive demand. The second half of September — after the Fed and NBU meetings — may see greater exchange rate volatility. Additional pressure on the hryvnia could emerge if the dollar strengthens in global markets, oil prices remain high or export logistics deteriorate further.
Translation into English was created with the help of artificial intelligence.
