The indicators of the Ukrainian foreign exchange market and the methodology for their calculation correspond to the conditions and needs of the market, at the same time, it is advisable to supplement them with the calculation of the reference value of the hryvnia to euro exchange rate as of 12 o'clock and move on to a unified – daily – list of currencies to establish the official exchange rate hryvnia, this recommendation was made by the Council of Oversight of the Money and FX Market Indicators.

"The relevant structural divisions of the National Bank will prepare proposals for the practical implementation of these initiatives," the NBU said in a statement on its website without specifying the timing of when these recommendations will be implemented in practice.

The currency structure of transactions in the foreign exchange market of Ukraine confirms the status of the U.S. dollar as the main exchange rate currency. However, in the segment of bank transactions with clients, the share of transactions in euros in the total volume has been trending upward since pre-war times.

"In particular, in transactions for the purchase of non-cash currency by clients, the share of transactions in euros came close to 50%. The continuation of this trend, taking into account Ukraine’s European integration aspirations, may in the foreseeable future raise the issue of the advisability of switching from the U.S. dollar to the euro as the main currency of the exchange rate peg. At the current stage, as noted by external members of the Oversight Council, market participants already need to calculate an indicator of the reference value of the hryvnia to euro exchange rate as of 12 o'clock," the National Bank said.

The Oversite Council also discussed the feasibility of the continued existence of two – daily and monthly – lists of currencies for establishing the official exchange rate of the hryvnia. In particular, it was noted that due to the development of IT, operational restrictions on the daily calculation of official rates to a larger list of currencies (if necessary) have disappeared. In addition, the existence of a list of currencies, the rate for which is set once a month, increases the risk of the practice of double rates, which could lead to violations of Ukraine's commitments to the IMF, the NBU added.

The central bank added that the practice of European countries shows that in the vast majority of them there is only one, daily, basket of currencies for the official/reference rate.

The Oversight Council also took note of the introduction by the IMF of a new policy to prevent dual exchange rate practices from February 2024. "In particular, this policy sometimes contains a warning regarding official/reference rates, the calculation methodology of which involves cutting off extreme values," the NBU explained. At the same time, the regulator indicated that as a result of the review, a decrease was noted compared to the pre-war period in the share of transactions in the primary sample for calculating the official and reference values of the hryvnia exchange rate to the U.S. dollar, which are rejected as extreme in accordance with the current methodology.

During the review, despite a significant decrease in activity on the Ukrainian foreign exchange market during the war compared to pre-war times, the trading volume is quite sufficient to calculate reliable exchange rate indicators of the hryvnia to the U.S. dollar (reference and official rates) using the current methodology their definitions as a weighted average.

"At the same time, this activity is completely insufficient to consider in the foreseeable future the issue of a possible transition to calculating foreign exchange market indicators using the fixing methodology," the NBU stated.

The central bank said that the periodic review of foreign exchange market indicators is a special procedure, the purpose of which is to assess the presence of structural changes in the market and/or the emergence of other grounds that may indicate the need to replace existing indicators, correct their methodology or other important aspects related to their calculation and publication. It is carried out by the Council of Oversight of the Money and Foreign Exchange Markets Indicators; for the first time such a review was carried out in February 2024, and in the future it is planned to be carried out every six months – no later than February and August, respectively.

Currently, the list of currencies to which the National Bank sets the hryvnia exchange rate daily contains 33 items, while monthly – 24 items. Among the latter, in particular, are the currencies of Algeria, Thailand, Brazil, Armenia, the United Arab Emirates, the Dominican Republic, Vietnam, Iraq, Iran, Georgia, Lebanon, Libya, and Malaysia. This list also includes the currencies of Morocco, Taiwan, Pakistan, Saudi Arabia, Serbia, Kyrgyzstan, Tajikistan, Bangladesh, Tunisia, Turkmenistan and Uzbekistan.