Ukraine is evaluating a potential shift away from the US dollar as its reference currency, considering a move toward closer alignment with the euro amid growing economic and political ties with Europe, Central Bank Governor Andriy Pyshnyi told Reuters.
Pyshnyi said several factors have prompted this reassessment, including Ukraine’s prospective accession to the European Union, the EU’s increasing role in supporting the country’s defence, rising global market volatility, and the fragmentation of global trade.
“This work is complex and requires high-quality, versatile preparation,” he noted in his most direct public comments on the matter to date.
The US dollar remains the dominant global reserve currency and is central to international trade, with major economies such as Saudi Arabia and Hong Kong still pegging their currencies to it. However, under President Donald Trump’s administration, the US has launched a new wave of trade tariffs—potentially the highest in a century—raising concerns about the dollar’s long-term position as the global reserve standard.
Ukraine, now in the fourth year of war following Russia’s invasion, has seen its military support from the US fluctuate, including a temporary suspension of aid under Trump. Meanwhile, European leaders have expressed commitments to strengthening Ukraine’s defence, though tangible progress has faced obstacles.
Despite ongoing security concerns, Kyiv has signed agreements granting the US preferential access to new mineral contracts and investment in postwar reconstruction. Still, the euro’s appeal appears to be rising, particularly as the dollar index has declined by over 9% against major currencies since Trump’s return to office, prompting some investors to reduce their US asset holdings.
While Pyshnyi acknowledged that dollar-denominated transactions continue to dominate Ukraine’s foreign exchange markets, he noted that euro-based transactions are on the rise, albeit moderately. He did not provide further specifics.
Ukraine introduced the hryvnia in 1996, traditionally using the dollar as its reference currency. After Russia’s full-scale invasion in February 2022, the National Bank of Ukraine imposed capital controls and fixed the hryvnia at a rate of approximately 29 to the dollar. However, that peg was later loosened due to mounting fiscal pressures. In October 2023, the central bank transitioned to a managed exchange rate regime, still using the US dollar as the benchmark for interventions and to moderate exchange rate fluctuations.
Faridah Abdulkadiri
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