Ukraine needs more than just a stable hryvnia. Ukraine needs a stable currency system. And these are different things. The exchange rate policy of the National Bank of Ukraine in 2022\u20132026 was one of the key pillars of the country’s macro-financial stability in the conditions of a full-scale war. It was the hryvnia exchange rate that became not only an economic indicator, but also a psychological symbol of the state’s ability to maintain control over the financial system.<\/p>\n
However, today it is time to ask a fundamental question: was this policy effective?<\/p>\n
The answer cannot be unambiguous. In the short term, yes, it was effective. The NBU did not allow a currency panic, the destruction of the banking system, uncontrolled devaluation and an inflationary spiral. But in the strategic dimension, the NBU’s exchange rate policy is increasingly demonstrating limitations. Exchange rate stability is ensured not so much by the strength of the economy, but by large-scale currency interventions, administrative restrictions, high interest rates and international financial assistance.<\/p>\n
In other words, Ukraine has gained exchange rate stability for survival, but has not yet gained currency stability for development.<\/p>\n
Why a fixed exchange rate was the right solution to the first war shock<\/p>\n
After February 24, 2022, the NBU switched to a fixed exchange rate regime. The official hryvnia exchange rate to the US dollar was fixed at about UAH 29.25 per $1. This was a forced, but generally correct decision. And considerable merit in this was due to the then NBU Chairman Kyrylo Shevchenko and the NBU Council. There was no self-PR, self-praise – there was purposeful work for results. In the first months of the war, free exchange rate formation could cause panic, a mass flight from the hryvnia, a sharp increase in the price of imports, a blow to the banking system and a disruption of financial circulation. The NBU explained the fixing of the exchange rate precisely by the need to maintain macro-financial stability in conditions of extreme uncertainty.<\/p>\n
However, already in July 2022, it became obvious that the exchange rate of 29.25 UAH per $1 no longer corresponds to the real state of the economy. The NBU made a one-time adjustment of the official exchange rate by 25% – to 36.5686 UAH per $1. The regulator itself explained this by the change in the fundamental characteristics of the economy during the war and the need to balance the foreign exchange market. At this stage, the NBU acted as an anti-crisis institution. And here its policy can be assessed positively. In 2022, the question was not about the classical market model, but about preserving the manageability of the financial system. The fixed exchange rate became a temporary shield that gave the economy time to adapt to the war shock. But any shield has its limit. If the temporary regime is prolonged, it begins to generate imbalances.<\/p>\n
What is Managed Flexibility – a step forward or controlled devaluation?<\/p>\n
From October 3, 2023, the NBU switched to a regime of managed exchange rate flexibility. Formally, this meant abandoning rigid fixing. The official exchange rate began to be determined on the basis of operations on the interbank foreign exchange market. At the same time, the NBU retained an active role: it continued to smooth out excessive fluctuations and compensate for the structural deficit of the currency.<\/p>\n
This step was correct, but very cautious. The NBU recognized that the long-term maintenance of a fixed exchange rate creates risks of accumulating currency imbalances. However, the regime of managed flexibility in Ukrainian conditions did not become a full-fledged market exchange rate formation. Rather, it turned into a model of controlled devaluation, where the exchange rate is supposedly flexible, but its trajectory largely depends on the daily presence of the NBU in the foreign exchange market. As of April 24, 2026, the official exchange rate was 43.9412 UAH\/$1. and 51.3804 UAH\/euro. That is, compared to the level after the July 2022 correction, the hryvnia has weakened noticeably, although this process did not occur in a shock, but gradually. This made it possible to avoid panic. But at the same time, another problem arose: the market is increasingly getting used to the fact that the real source of stability is not the balance of supply and demand for currency, but the NBU’s interventions.<\/p>\n
Billion-dollar interventions and reserves as the price of stability<\/p>\n
The weakest point of the NBU’s exchange rate policy is its high cost. The stability of the hryvnia in 2024-2026 is increasingly ensured by the sale of currency from reserves. For example, in December 2025, the NBU’s net sale of currency amounted to about $4.46 billion, in January 2026 – $3.74 billion, in February – almost $3.0 billion, in March – about $4.77 billion. These are very large amounts. They indicate that the Ukrainian foreign exchange market is not in a state of self-sufficient equilibrium. It operates under the condition of constant support of the central bank.<\/p>\n
As of January 1, 2026, Ukraine’s international reserves amounted to $57.3 billion – this was a record level for the years of independence. But already by the end of March 2026, the reserves had decreased to $52.0 billion. The NBU directly explained this by currency interventions and debt payments in foreign currency, which were only partially offset by external revenues and the placement of foreign currency government bonds. This means that the current exchange rate stability is largely imported stability. It is financed by international assistance, loans, grants, foreign exchange borrowings and the NBU’s reserves.<\/p>\n
It does not rely sufficiently on exports, investments, private capital inflows, or productivity growth. This is where the line between tactical efficiency and strategic vulnerability lies.<\/p>\n
Structural balance of payments deficit<\/p>\n
A separate problem is that the stability of the hryvnia is maintained against the backdrop of a deteriorating external economic structure. The structural balance of payments deficit is widening and, according to available estimates, could amount to about $47 billion annually, or about 22% of GDP, by early 2026. Formally, the exchange rate remains relatively stable. But this stability comes at a high price: the NBU is forced to sell significant amounts of currency every month, effectively compensating for the external sector deficit at the expense of official reserves. If the annual scale of interventions approaches $35-40 billion, this is no longer just technical smoothing of fluctuations, but systemic financing of the currency gap. The main reason for this gap is a chronically negative trade balance. The trade deficit, which may already exceed $60 billion a year, is not just a consequence of the war. It is a symptom of a deeper structural weakness in the economy.<\/p>\n
Ukraine has lost some of its production capacity. Logistics remains expensive and vulnerable. The export base is narrowed. The energy infrastructure is being destroyed. Domestic demand is largely met by imports – from fuel, machinery and energy equipment to defense purchases, consumer goods and industrial components. As a result, the country consumes more foreign exchange than it is able to generate through exports and private investment inflows. And this means that the hryvnia exchange rate is supported not by a strong external sector, but by constant external financing. This is fundamentally important. Because the problem of the NBU’s exchange rate policy is not only how much hryvnia is worth to the dollar. The main question is what is holding this exchange rate at.<\/p>\n
The need and risks of currency liberalization<\/p>\n
The NBU is gradually easing currency restrictions and restoring elements of the market mechanism. In general, this is the right direction. The economy cannot live for years under full administrative control. Businesses need opportunities for external settlements, investors need clear rules, and banks need normalization of the currency market. But currency liberalization in conditions of war, a large budget deficit, high import dependence, and the dominance of non-market currency flows has a double effect. On the one hand, it brings the market closer to a more normal model. On the other hand, it can increase the instability of expectations.<\/p>\n
This was especially evident in the spring of 2026, when business and the population began to more actively increase demand for currency. If the population withdraws more than 20% of the NBU\u2019s interventions into private foreign exchange savings, this creates a dangerous effect: the central bank sells currency to stabilize the market, but a significant part of it goes not to production, not to investments, not to critical imports, but to a private foreign exchange \u201csafety cushion\u201d. For citizens, this behavior is understandable. In times of war, people seek protection from risks. But for macroeconomics, this means that international reserves are partially converted into private foreign exchange savings. This does not create new economic value, does not increase export potential, and does not reduce the future need for interventions. Therefore, liberalization should not be an end in itself, but part of a broader strategy to strengthen the external sector.<\/p>\n
Inflation targets not achieved and the danger of dependence on interventions<\/p>\n
The NBU has reason to claim that exchange rate policy has helped contain inflation. For Ukraine, the hryvnia exchange rate has traditionally been one of the most important channels of influence on prices. The devaluation is quickly passed on to the cost of fuel, imported goods, medicines, machinery, logistics, equipment and food components. The stabilization of the exchange rate did help to avoid the worst-case scenario. However, it did not return inflation to the target level. In December 2025, inflation slowed to 8.0% in annual terms, but this was still above the NBU\u2019s inflation target of 5%.<\/p>\n
This is an important circumstance. After all, if even under conditions of high interest rates, currency restrictions and large-scale interventions, inflation remains above the target, then the effectiveness of the policy cannot be considered complete. It restrains the crisis, but does not form full-fledged price stability.<\/p>\n
Here another problem appears: the NBU is often forced to perform functions that go beyond the limits of classical monetary policy. It tries to simultaneously control inflation, maintain the foreign exchange market, maintain confidence in the hryvnia, protect reserves and not destroy lending. But without a coordinated fiscal, industrial, trade, and energy policy, the central bank cannot independently solve the structural problems of the economy.<\/p>\n
The constant dependence of the exchange rate on the NBU’s interventions has several risks.<\/p>\n
First, it reduces market predictability. Businesses do not always understand where the market rate ends and where administrative smoothing begins. This complicates investment decisions, pricing, foreign economic contracts, and currency planning.<\/p>\n
Second, it creates expectations that the NBU will always be present in the market as the main seller of currency. This weakens the incentives to hedge risks and can create moral hazard for importers, banks and market participants.
\nThird, it keeps foreign capital out of the country. The investor does not see a full market equilibrium, but a system where the exchange rate depends on the political support of partners, budget flows and central bank decisions. This is not enough for long-term investments.
\nFourth, it creates the risk of losing reserves in the event of a delay in international financing. If external revenues are reduced or delayed, the NBU has to either spend reserves faster or allow the exchange rate to move more sharply.<\/p>\n
The IMF in its documents also emphasizes the need for greater exchange rate flexibility to protect reserves and reduce external imbalances. This means that even international partners effectively recognize that maintaining the exchange rate mainly through interventions is expensive and risky.<\/p>\n
Exchange rate policy instead of development policy<\/p>\n
The biggest problem is that the NBU\u2019s exchange rate policy has become a substitute for a broader economic strategy. When a country has weak exports, high imports, a budget deficit, a destroyed infrastructure, a lack of investment, and a structural dependence on foreign aid, the central bank is forced to become the main stabilizer of the entire system.<\/p>\n
But the exchange rate cannot replace industrial policy. The discount rate cannot replace export strategy. Currency interventions cannot replace investment in production. The NBU\u2019s reserves cannot be a perpetual source of compensation for the trade deficit. That is why the effectiveness of exchange rate policy should be assessed not only by whether panic was avoided. Yes, it was. But we should also ask something else: has the economy become less dependent on imports? Has the export of high-value-added goods increased? Has the need for interventions decreased? Has private capital returned? Has the hryvnia become stable due to trust in the economic model, and not just due to the NBU selling currency? So far, the answer to these questions remains rather negative.<\/p>\n
What needs to be changed<\/p>\n
Ukraine needs more than just a stable hryvnia. Ukraine needs a stable currency system. And these are different things. A stable hryvnia can be sustained by interventions. A stable hryvnia is sustained by a strong economy. This requires a transformation of the external sector model – from compensatory to investment-export. Today, international aid mainly compensates for budget and foreign exchange deficits. Tomorrow, it should become a catalyst for production, exports, energy modernization, logistics, and technological renewal.<\/p>\n
Investments are needed in production with high added value, modernization of transport infrastructure, development of the defense-industrial complex, energy sustainability, mechanical engineering, agro-processing, critical raw materials, digital and engineering services. Coordination of currency, monetary, budgetary, industrial and trade policies is needed. The NBU cannot solve the balance of payments problem on its own. If government policy stimulates imports, but industrial policy remains weak, the NBU will be forced to continue selling currency to maintain exchange rate stability. A new logic of international aid is needed. It should gradually move from the \u201cclosing holes\u201d model to the \u201claunching the investment cycle\u201d model. Every billion of external financing should work not only for current stability, but also for the future reduction of the foreign exchange deficit. Honest communication between the NBU and the market is also needed. Not self-PR and complacency. Business and the population should understand not only the current exchange rate, but also the logic of exchange rate policy: where are the limits of flexibility, how the NBU sees the role of interventions, what are the conditions for further liberalization, what are the risks for reserves and what are the criteria for returning to a more normal regime.<\/p>\n
The NBU\u2019s exchange rate policy in 2022\u20132026 was effective as an anti-crisis survival policy. It helped avoid currency panic, preserve the banking system, contain inflationary shocks, and maintain confidence in the hryvnia during the most difficult period of the war. But as a long-term development policy, it has serious limitations. Exchange rate stability, which is based on currency interventions, external assistance, administrative restrictions, and high interest rates, is not full-fledged stability. It is rather an expensive pause that gives time for structural changes.<\/p>\n
The problem is that this time may be lost. If Ukraine does not switch from a deficit compensation model to a model of investment and export growth, the NBU\u2019s exchange rate policy will continue to be forced to play the role of a fire brigade. It will extinguish the consequences, but not eliminate the causes. Therefore, the main conclusion is this: the NBU has won the first stage of currency stabilization, but the country has not yet won the battle for currency stability.<\/p>\n
The true effectiveness of exchange rate policy should be measured not only by how smoothly the hryvnia exchange rate moves, but also by whether the country’s dependence on interventions, imports, and external financing decreases.<\/p>\n
Without strong exports, investment, industrial recovery, and confidence in economic policy, a stable exchange rate will remain not a sign of strength, but an indicator of how much more currency the state is willing to spend to maintain the illusion of balance.<\/p>\n
Bohdan Danylyshyn, for Glavkom<\/strong><\/p>\n <\/p>","protected":false},"excerpt":{"rendered":" Ukraine needs more than just a stable hryvnia. Ukraine needs a stable currency system. And these are different things. The exchange rate policy of the National Bank of Ukraine in 2022\u20132026 was one of the key pillars of the country’s macro-financial stability in the conditions of a full-scale war. It was the hryvnia exchange rate […]<\/p>\n","protected":false},"author":1,"featured_media":10949,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12,13],"tags":[],"class_list":["post-10948","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-actually","category-analytic"],"_links":{"self":[{"href":"https:\/\/corporativ.info\/en\/wp-json\/wp\/v2\/posts\/10948","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporativ.info\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corporativ.info\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corporativ.info\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/corporativ.info\/en\/wp-json\/wp\/v2\/comments?post=10948"}],"version-history":[{"count":2,"href":"https:\/\/corporativ.info\/en\/wp-json\/wp\/v2\/posts\/10948\/revisions"}],"predecessor-version":[{"id":10963,"href":"https:\/\/corporativ.info\/en\/wp-json\/wp\/v2\/posts\/10948\/revisions\/10963"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corporativ.info\/en\/wp-json\/wp\/v2\/media\/10949"}],"wp:attachment":[{"href":"https:\/\/corporativ.info\/en\/wp-json\/wp\/v2\/media?parent=10948"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corporativ.info\/en\/wp-json\/wp\/v2\/categories?post=10948"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corporativ.info\/en\/wp-json\/wp\/v2\/tags?post=10948"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}