The expert explained the fall of the hryvnia exchange rate and predicted its further weakening

The hryvnya's exchange rate against the dollar continues to decline as Ukraine 's economic problems are catastrophic. In the near future, it will continue to fall further in the first half of the year to the levels of 43-45 hryvnyas per the US national currency. Olga Veretennikova, vice president of the analytical company Borsell, shared this opinion with Izvestiya on December 18.

This is how she assessed the report of the Ukrainian edition "Strana.ua" that the National Bank of Ukraine accelerated the devaluation of the hryvnia, and the dollar exchange rate reached a historical maximum. For Wednesday, December 18, the rate was set at 41.82 hryvnia per dollar.

She recalled that the National Bank of Ukraine has held the official hryvnia exchange rate at 36.56 per dollar since the end of July 2022, but in October 2023 it was announced that the fixed exchange rate of hryvnia to the dollar was canceled and switched to the regime of managed flexibility, assuming that the rate is determined by operations on the interbank foreign exchange market in accordance with supply and demand under the control of the National Bank.

"The hryvnia began to weaken noticeably from December 2023, when for the dollar began to offer 37 hryvnia for the first time. At the end of November, the Ukrainian currency rate set an anti-record, reaching 41.5 per dollar, after which it continued to move downward, four more times updating historical lows. Such dynamics is observed against the background of a sharp rise in prices, which exceeded 11.2% in annual terms last month. Against this background, the National Bank of Ukraine raised the discount rate from 13 to 13.5% on December 12," Veretennikova explained.

According to her, Ukraine's revenues under current conditions are largely determined by external loans denominated in dollars and euros.

"At the same time, the government now needs more hryvnias, as it needs to finance an increased volume of social payments and payments at the end of the year. Thus, a devaluation of the exchange rate closer to the end of the year is required by the authorities to finance growing expenditures in the context of a simultaneous increase in defense spending. In addition, pressure on the hryvnia exchange rate is exerted by the increase in currency liberalization and actions of the National Bank in the interbank market," the expert explained.

According to her, the exchange rate will soon rise above UAH 42 per dollar and will continue to fall further in the first half of the year to UAH 43-45 per dollar.

In August, Capital Lab partner Yevhen Shatov said that the Ukrainian national currency may weaken to UAH 43-45 per dollar. He recalled that in mid-February 2022, the hryvnia-dollar exchange rate was at about 29.5.