Experts expect further devaluation of the hryvnia this week, and January may be critical: it will become clear whether the hryvnia will gradually depreciate or there will be a momentary collapse of the rate below 43 UAH per dollar.
Exchange rates in Ukraine: the hryvnia fell to the dollar to a record low. Moreover, experts predict further devaluation of the hryvnia.
What to expect in the next week of January – in the exclusive TSN.UA.
In December last year, the cash dollar exchange rate increased by 60 kopecks in sale and 40 kopecks in purchase. And for the whole of 2024, the cash dollar rose in price by 4.30 UAH in sale and 4.10 UAH in purchase. On the illegal market, the dollar for sale only became more expensive. For the week from December 30 to January 5, the rate increased by 35 kopecks to 42.65 UAH/dollar. In purchase during the week, there was a minimum on January 1: only 42 UAH/dollar (-32 kopecks) and a maximum on January 5: 42.45 UAH/dollar (+13 kopecks in a week). The National Bank ended last year with a record rate of 42.04 UAH/dollar, later reduced it to 41.97, but on Friday, January 3, it was 42.04 again. On Monday, January 6, the regulator set the official rate at 42.09 UAH/USD (+15 kopecks per week).
Financial analyst Andriy Shevchishin noted that the week between December and January was calm compared to the previous week, when the National Bank sold $1.6 billion in currency from its reserves, which is more than it had done before the month. According to the expert, there should not be such significant expenditures on NBU reserves in January.
“In December, the NBU sold 5.284 billion dollars from reserves, this is a record monthly volume in history, which is why the hryvnia exchange rate did not collapse, but only increased to more than 42 UAH/dollar – Andriy Shevchyshyn analyzes. – Can we allow such expenses – yes. For the year, foreign exchange reserves amounted to 42.8 billion dollars, this is enough. and state-owned companies (here, the defense industry is also)”.
What to expect from the exchange rate
Experts expect further devaluation of the hryvnia this week, and January may be critical: it will become clear whether the hryvnia will become cheaper smoothly or there will be an immediate collapse of the rate below 43 UAH per dollar.
According to Oleg Pendzin, a member of the economic discussion club, the trend towards devaluation can be seen in the actions of the National Bank, which set the official hryvnia exchange rate for Monday, January 6, significantly lower than before the weekend.
“The official rate is a benchmark for the interbank market,” Oleg Pendzin analyzes. “The cash rate depends more on the demand for currency from the population, which is still insignificant in the new year. This week, the Ministry of Finance is expected to sell large volumes of currency to finance social payments, so the regulator will make the hryvnia even cheaper, which will affect the interbank and cash markets. The average sales rate will not reach 42.60 UAH/dollar.”
Andriy Shevchishin says that now the supply of currency on the interbank market has decreased by 30%, and demand by 70%, so there is no excitement on the cash market either.
“The week from January 6 to January 12 is expected to see a revival of business activity, while the cash market will remain quiet for now. It is difficult to say how long it will last, and on average the dollar will not be sold in cash for less than UAH 42.50”
Economist Andriy Zablovsky noted that the exchange rate corridor is gradually shifting upwards, it is already holding significantly above 42 UAH/dollar on the interbank market. It is obvious that a slow devaluation of the hryvnia is taking place, which will continue on the cash market. The expert emphasized: while the transition period from the holidays to increased business activity continues, it is difficult to say whether the dollar will rise above the current 42.55 UAH per unit this week, or whether this average rate will hold for some time.
Sell or buy currency
Experts in their advice summed up the results of last year on the use of this or that financial instrument for investment. Oleg Pendzin, who is a supporter of investments in the hryvnia, cited the following figures.
“A year ago, one dollar in cash cost an average of 38 hryvnias on sale, now it is 42.50, the purchase rate is now 41.80-42.30 UAH/dollar. That is, the profit due to the growth of the exchange rate was 3.80-4.30 UAH per dollar or 10-11% per annum. Last year, the average interest rate on hryvnia deposits was 13-14%, and on government securities in hryvnia (OVGZ) it reached 20%.
This year the situation is different: interest on deposits is lower, 11-11.5% per annum for short-term deposits for a period of three months, and the income tax is higher. But, according to Oleg Pendzin, in the first three months of the year the dollar exchange rate will not grow higher than 43.5 UAH/dollar. This is within 2%, so it is obvious that even deposits, not to mention government bonds, will give more profit in three months than buying currency now.
Andriy Zablovsky drew attention to the different trends in the dollar and euro exchange rates: if the American currency rises in price against the hryvnia, then the European one becomes cheaper.
“There are a number of economic and political reasons for the euro to become cheaper, Ukraine does not influence this in any way, because the hryvnia exchange rate is tied to the dollar, not to the euro. Therefore, if the euro falls against the dollar, then automatically – against the hryvnia”
According to Zablovsky's forecast, the euro may become even cheaper, but parity, when 1 euro will be worth 1 dollar, is not expected yet. Therefore, the euro is now attractive to those who will buy the euro currency not for the purpose of making a profit, but in order to spend it in the EU countries in the future: for education, treatment, travel, etc.
Andriy Shevchishin stated: last year Ukrainians bought $11 billion more in cash currency than they sold, three times exceeding the 2023 figure. The reason, in his opinion, is obvious: the population is more concerned not with the opportunity to earn “on money”, but with not losing what they have already earned during the war. Therefore, even at the current high exchange rate, they will continue to buy cash currency. But experts still do not advise selling currency unless absolutely necessary. The exception is when the hryvnias earned from the sale of currency are spent on some projects.
Investment banker amazed with a forecast for 2025
Let us recall that the investment banker recently gave a forecast for 2025. According to him, the growth of the dollar exchange rate next year by another 10% to 46-47 hryvnia is a healthy process for the Ukrainian economy. This will help manufacturers maintain competitiveness.
This statement was astonishing to the director of the investment company Dragon Capital, Tomas Fiala.
As Fial noted, on the one hand, it is beneficial for the National Bank to keep the exchange rate fairly stable. At the same time, Ukraine has a significant trade balance deficit of 15% of GDP, which is covered by $40 billion in international aid per year. According to him, Ukraine is guaranteed to receive this money next year.
This is the first time we have such predictability. This also adds comfort to our macro forecasts and our investment. This is the first time during the war that we know, we are confident that our budget deficit will be financed not only for the next year, but also for part of 2026. This is very good,” the expert explained.
You can watch the video on the TSN YouTube channel at this link: ” HRYVNIA HAS COLLAPSED TO A RECORD! The new dollar exchange rate is shocking! And this is not the end yet! “
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