The dollar is spending its value both in Ukraine and on world markets. This is on the lookout for significant economic and policy changes, based on US policy decisions, that could provoke global economic hardships.
About those for whom, after a sharp decline, the dollar falls and the euro grows rapidly, read the review of RBC-Ukraine journalist Alik Sakhna.
Contents:
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Why is the euro growing and the dollar falling?
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How does this contribute to the Ukrainian economy in the hryvnia?
Over the three years of the war, the ready-made dollar in Ukraine rose in price by as much as half, after the American currency moved past the psychological mark of 42 hryvnia per dollar, its decline began, and the euro, on the contrary, began to grow.
On January 7, the National Bank of Ukraine (NBU) again lowered the dollar-to-hryvnia exchange rate, setting it at 41.27 hryvnia/dollar. In this manner, the National Bank exchanged the hryvnia against the dollar for the third day in a row. The last time the dollar fell so many times at the end of the leaf fall of the past.
At the same time, the European currency has increased in price by almost 4 hryvnia, reaching 44.55 hryvnia/euro. The euro fell after it rose to 46 hryvnia at sickle-spring, and after the fall of leaves it went to 43-43.50 hryvnia per euro.
Why is the euro growing and the dollar falling?
Since the beginning of this year, the euro on world markets has shown a growth rate similar to the dollar, according to RBC-Ukraine financial analyst Andriy Shevchyshyn. In his words, recently the euro exchange rate was at the level of 1.38 dollars, and today it is already approaching 1.08. Shevchyshin emphasizes that, with a sharp shift in politics, the political situation, actions and rhetoric of the US administration should be replaced by current foreign policy and propaganda.
“One of the main reasons for such dynamics is the negative impact of the tariff war on the American economy, especially Canada and Mexico, where mutual exchanges are causing serious difficulties. In turn, This is greatly affected by the US agricultural sector, which is experiencing costs through changes in supplies and increased costs. China, despite sanctions, does not reduce its supplies, and Canada can now limit the supply of energy resources, such as gas and electricity, which could lead to energy problems for certain states,” he said.
Besides the political situation, US macroeconomic indicators play an important role in the falling dollar. Zokrema, problems on the naphtha market will reinforce negative trends. Naphtha reserves have changed significantly less, they have been recovered, and oil prices have increased evenly with the previous period. This is to say about the low demand for naphtha, which, in turn, indicates a weakening of economic activity.
Another negative factor is the situation on the food market: the number of new workers is significantly less than predicted. It was estimated that there would be close to 160 thousand new vacancies, but in reality less than 77 thousand jobs were created. This indicates a profound decline in the economy of the United States of America.
This economic situation is causing investors to reconsider their strategies. They want to withdraw capital from American markets and send it to European markets. This causes the price to increase by the euro, while the price will decrease by the dollar. As a result, this directly contributes to the growth of the euro/dollar exchange rate.
According to Reuters data, the dollar index for major world currencies fell to 105.46 points, which became the strongest indicator since the past year. The main reason for this is the decision of Donald Trump to introduce a countermeasure against the country's allies through the escalation of trade tensions.
How does this contribute to the Ukrainian economy in the hryvnia?
Andriy Shevchyshyn respects that the actions of the National Bank of Ukraine on the exchange rate do not directly affect the exchange rate. The main officials are foreign economic processes. In his words, the National Bank is adjusting the exchange rate of the hryvnia in the Russian market, obviously, to ensure the purchase of strategic goods.
“Data for the Interbank Bank and the ready-made market do not show significant changes, which indicates the stability of the situation in Ukraine, although investment activity is active every day. European investors were in no hurry to invest in Ukrainian bonds, and the stock market does not have sufficient development to receive portfolio investments,” the expert adds.
It also means that the interest of foreign investors in government bonds (DCBs) is falling, so, in my opinion, to confirm the number of active investment processes in Ukraine. Moreover, Shevchyshyn points out that the recent increase in the tax rate by the National Bank did not lead to significant changes in deposit rates.
“At the current situation on the currency markets, except for the depreciation of the dollar, there is no significant increase in the availability of goods in Ukraine. Importers do not reduce prices, and the depreciation of the exchange rate does not affect the goods that are sold quickly And there may be a high turnover, such as pallivo. For more processed goods, prices are no longer stable,” the financial analyst asserts.
The expert underlines that sharp economic moves from the side of the United States could lead to a global economic crisis. Lockdowns, the introduction of new tariffs and other economic restrictions may cause currency devaluation and a collapse in foreign prices.
“The Trump administration's policy of increasing tariffs opens a Pandora's box for the light economy. These changes are already creating serious difficulties for the United States, and this trend is trivial.” The whole world is a legacy – from Ukraine and Russia to China and Europe,” sums up Andriy Shevchyshyn.
Let’s guess in which currency it is better for Ukrainians to save money in 2025: dollars or euros.
When preparing the material, the exclusive commentary of financial analyst Andriy Shevchyshyn was used, as well as data from the websites of the National Bank of Ukraine (NBU) and Reuters.