Ukrainians conduct fewer exchange transactions with dollar in 2024, interest in euro, zloty and pound increases - KYT Group
The share of exchange transactions of the population with the U.S. dollar ($) last year decreased to 74.1% from 78.7% in 2023, while for the euro (EUR), Polish zloty (PLN) and British pound (GBP) it increased, according to an analysis by analysts of the currency exchange market operator KYT Group based on data from 100 branches in 30 of the largest settlements in Ukraine.
"Despite everything, the U.S. dollar remains the dominant currency of transactions, but its share has decreased, which may indicate the strengthening of the role of the euro and other currencies in the currency market," KYT Group analysts commented on the data in a currency review.
However, the share of transactions with euros increased from 20.8% in 2023 to 25.15% in 2024. According to analysts, such dynamics may be a consequence of large-scale emigration of economically active Ukrainians to the Eurozone countries, more active foreign trade with EU countries, changes in business payment preferences, or diversification of population savings.
According to the data provided, the number of transactions with Polish zlotys increased more than 1.5 times last year: up to 0.56% from 0.36% in 2023, which KYT experts attribute to the activity of labor migrants, deepening business ties between the countries and, accordingly, the growth of financial flows between Ukraine and Poland.
The share of exchange transactions with the British pound almost doubled in 2024: up to 0.15% from 0.08% in 2023. Analysts believe that such a "leap" in the indicator, despite the low overall share in terms of cash transactions, may indicate the expansion of economic ties between Ukraine and the UK, an increase in cross-border transactions and strong confidence in British financial instruments.
"A decrease in the share of the dollar in foreign exchange transactions does not mean its loss of the status of a key reserve currency in Ukraine. The high liquidity of the dollar, its stability and its global status continue to make it the main instrument for preserving capital," analysts at KYT note.
They suggest that the current changes may be a consequence of attempts by businesses and the population to diversify currency assets.
"This is especially relevant against the backdrop of changes in the monetary policy of the U.S. and the European central banks. If the ECB continues its easing policy, the hryvnia to the euro exchange rate may be more stable than to the dollar," they point out.
In this context, the experts also recalled the possible change in the peg of the official hryvnia exchange rate to the euro, instead of the dollar, announced by the National Bank of Ukraine (NBU), as part of the desire to join the European zone in the future.
"The financial behavior and currency preferences of Ukrainians are changing in accordance with external economic conditions. If the trend continues, the euro may continue to increase its share in the cash market, and the zloty will remain an important currency for private and business transactions," the analysts concluded.