Issue No. 2 – August 2026
Analysis of the Current Situation in Ukraine’s Foreign Exchange Market
August ended with a noticeable strengthening of the hryvnia in Ukraine’s foreign exchange market. While the month began with an official exchange rate of 44.69 UAH per dollar, the rate stood at 44.55 UAH/USD as of August 31. The price of exchange rate stability and the absence of devaluation-driven fluctuations has been massive intervention by the NBU, which exceeded $4.6 billion during August. Thus, assessing the summer state of the foreign exchange market, we see that the NBU sold over $14.4 billion on the market between June and August; however, demand is not decreasing but, on the contrary, is growing. This is driven by the dire consequences of Russian attacks on domestic businesses and companies in the energy sector. The more destruction there is, the greater the need for new purchases of machinery, equipment, and materials—particularly from abroad. This factor will continue to put pressure on the hryvnia throughout the fall, and the National Bank will defend its stability through interventions.
The economic situation in Ukraine is deteriorating primarily as a result of the enemy’s active military operations aimed at destroying the country’s economic prospects. It is already known that large businesses have suffered multi-billion losses following aggressive attacks on various factories, warehouses, stores, and gas production facilities. The ongoing naval blockade is also a cause for concern, as it makes it nearly impossible to export agricultural products by sea due to constant shelling of ports and ships. According to analysts’ forecasts, such a blockade will cost the country approximately 0.6–0.7% of GDP. The Ukrainian Agribusiness Club also reported that if buyers are unable to export the new grain harvest abroad, losses in the agricultural sector will reach $12 billion. A significant drop in agricultural exporters’ foreign exchange earnings will also affect foreign exchange market volumes and may accelerate devaluation processes in the fall.
Global Context
The global market is once again in a state of complete uncertainty, as forecasts regarding the Fed’s interest rates are constantly changing. Recently, during a speech at a symposium, Fed Chair Kevin Worsh reaffirmed his commitment to fighting inflation. This immediately affected market expectations: the likelihood of a 25-basis-point rate hike at the Fed’s September 15–16 meeting has now increased. Inflation in the U.S. has consistently exceeded the Federal Reserve’s 2% target, fueling debate over whether the central bank should hold rates steady or raise them.
In August, the EUR/USD pair has been trending toward a weaker dollar. The month began at 1.1536 USD/EUR, but on August 20, the market saw a trend reversal—the exchange rate jumped to 1.1706 USD/EUR. However, by the end of August, the market had managed to return to a path of strengthening for the U.S. currency, which was trading at 1.1587 USD/EUR on August 31.
The war in the Middle East continues, affecting the economies of many countries and contributing to regular, erratic fluctuations in oil prices. Recently, there has been increasing talk in the U.S. about economic pressure on Iran, particularly through sanctions, and President Donald Trump has stated that he is no longer interested in renewing the June interim agreement with Iran. In fact, the situation in the Middle East has reached an impasse, as predictions of a lasting ceasefire or clear agreements between the U.S. and Iran to halt attacks are becoming increasingly rare.
Domestic Ukrainian Context
Throughout August, demand for foreign currency remained high. According to data from the National Bank of Ukraine (NBU), between August 3 and 28, the volume of NBU interventions to meet requests from importing companies exceeded $4.58 billion. The market continues to function solely thanks to the foreign currency supplied by the National Bank. The trade balance is in deficit. According to the State Customs Service, Ukraine’s trade turnover for the first seven months of 2026 totaled $82.2 billion: imports amounted to $58.1 billion, while exports totaled $24.1 billion. At the same time, over the first seven months of 2026, the NBU carried out interventions in Ukraine’s foreign exchange market totaling $43.4 billion.
The public continues to buy foreign currency—both dollars and euros. This is a typical financial strategy in conditions of heightened uncertainty. According to the NBU, in July, the public bought $2 billion and sold $1.5 billion. Thus, the balance between purchases and sales in July was $0.5 billion.
Partners continue to provide Ukraine with substantial funding for both social programs and national defense as the country combats Russian aggression. In August, the European Commission approved a new defense support package for Ukraine worth 6.1 billion euros. The funding will be directed toward urgently supplying the Ukrainian army with air defense systems, missile defense systems, radars, missiles, and ammunition.
To continue protecting the hryvnia from devaluation fluctuations, regular replenishment of international reserves with financial assistance from partners is absolutely essential.
The NBU expects Ukraine to receive a record amount of foreign aid this year—$87 billion. These funds will be allocated to various social programs (education, healthcare, etc.), the reconstruction of damaged infrastructure, and the production of weapons in Ukraine. According to the NBU’s forecast, real GDP will grow by approximately 1.8% by the end of 2026. The National Bank notes that economic growth could have been higher had it not been for the intensification of attacks on ports, warehouses, and production facilities, which are causing significant economic losses.
The inflation situation in Ukraine is causing some concern, as it accelerated to 7.7% year-over-year in July, while prices rose by 0.3% month-over-month. According to the NBU’s forecast, inflation will rise in the coming months, reaching 10% by the end of 2026. According to National Bank experts, prices will be pressured by significant budget expenditures, a further increase in companies’ labor costs, and secondary effects from rising energy prices. However, in July, the effects of massive attacks on food distribution centers and warehouses had not yet been felt, and Kyiv and its suburbs were not under conditions of heightened danger and constant alert—a situation that became a harsh new reality in the last ten days of August, which is having an extremely negative impact on economic development and significantly accelerating inflationary trends.
U.S. Dollar Exchange Rate: Trends and Analysis
In August, the hryvnia strengthened thanks to large-scale interventions by the NBU as part of its flexible exchange rate strategy. It appears that the regulator’s goal was to prevent the national currency from approaching the 45 UAH/USD mark. The month began with an exchange rate of 44.64 UAH/USD; by mid-month, the rate reached 44.70 UAH/USD; and it ended with the hryvnia strengthening to 44.55 UAH/USD. As before, the National Bank of Ukraine remains the primary seller of foreign currency on the interbank market.
In the cash market at the end of August, the buying rate was 44.15–44.50 UAH/USD, and the selling rate was 44.75–44.90 UAH/USD. Spreads have gradually narrowed and are currently within the range of 0.25–0.60 UAH/USD.
Key influencing factors:
• Increased demand for the dollar on the interbank foreign exchange market throughout August and the absence of devaluation fluctuations. The hryvnia is supported solely by interventions by the NBU, which sold over $4.58 billion on the market during August.
• The cash market is influenced by rising demand. The public is buying dollars and euros; the balance between the volume of cash currency purchased and sold by the public exceeds the figures for previous months, and spreads are narrowing.
• International factors: Tensions in the Middle East continue, and U.S. President Donald Trump has stated that there will be no return to previous agreements with Iran. Oil prices are rising in response to the escalating conflict.
• Market expectations: On the international market, the focus is on the September meeting of the Federal Reserve Committee, and forecasts have shifted dramatically—the market expects a 25-basis-point increase in the benchmark interest rate. In Ukraine, attention is focused on the situation at the front, as well as on intensified shelling of rear cities, which is damaging infrastructure and business facilities and leading to increased uncertainty and unpredictability regarding how the situation will unfold this fall.
Forecast
• Short term (1–2 weeks): target range of 44.55–44.95 UAH/USD. The National Bank will attempt to keep the hryvnia from fluctuating too far from the 45 UAH/USD mark.
• Medium term (2–3 months): 44.95–45.40 UAH/USD. On the international market, the dollar may strengthen in response to the Fed’s clear policy of raising interest rates. In Ukraine, the NBU will continue its strategy of exchange rate flexibility, remaining the primary seller of foreign currency amid a significant decline in exports and a drop in exporters’ foreign exchange earnings.
• Long-term (6+ months): In the baseline scenario, the devaluation trend remains the dominant one, and the exchange rate could reach 46.00 UAH/USD by year-end under certain macroeconomic conditions. In the fall, intensified Russian attacks on cities, infrastructure, and businesses could trigger a surge in demand for foreign currency to secure import supplies. Exchange rate fluctuations will be influenced by the inflow of new tranches into international reserves, the level of demand for foreign currency from importers, and changes in oil prices on the international market.
Euro Exchange Rate: Trends and Analysis
In August, the euro strengthened significantly on the Ukrainian market. While the official exchange rate was 51.27 UAH/euro at the beginning of the month, it stood at 51.88 UAH/euro on August 31. The exchange rate trend was significantly influenced by the euro’s appreciation on the international market.
On Ukraine’s cash market in August, the euro has been trading outside the 52 UAH/euro range. On August 31, the buying rate ranged from 51.50 to 51.90 UAH/euro, while the selling rate ranged from 52.20 to 52.40 UAH/euro. The spreads between the buying and selling rates for the euro widened in August and ranged from 0.40 to 1.0 UAH/euro.
Key influencing factors:
• On the international market, the euro is strengthening against the backdrop of a weaker dollar. Currency quotes are influenced by forecasts of a Fed rate hike in September, as well as uncertainty regarding the conflict between the U.S. and Iran and the timeframe for its resolution.
• The ECB is prepared to raise rates. Given inflation of nearly 3%, the ongoing conflict in Iran, and signs of resilience in the eurozone economy, the central bank may raise its policy rate from 2.25% to 2.50% at its September meeting.
• Demand for the euro is rising in the cash market. The euro is being actively purchased for travel to the EU and to build up foreign currency savings; no shortage of cash currency is expected.
Forecast:
• Short term (2–4 weeks): On the Ukrainian market, the euro may remain within the range of 51.90–52.25 UAH/€.
• Medium term (2–4 months): If the euro continues to strengthen on the international market, the exchange rate in Ukraine will reach 52.40–52.80 UAH/€.
• Long term (6+ months): By the end of the year, the euro exchange rate is likely to remain within the range of 52.60–53.80 UAH/€. The main factors influencing the euro exchange rate are fluctuations in the international market, which are affected by the September decisions of the U.S. Federal Reserve and the ECB regarding changes to the benchmark interest rate, developments in the conflict in the Middle East, oil prices, and inflation rates in EU countries.
Recommendations for Businesses and Investors
The dollar is once again under pressure from uncertainty. The Fed chair’s statement forced traders to reassess their forecasts for the benchmark interest rate—this affected the dollar’s trajectory on the international market, causing the exchange rate to fall.
The situation in the Middle East is no longer a major global factor affecting currencies. The dollar is currently more dependent on the Federal Reserve Committee’s September decision regarding interest rate changes than on agreements, statements, or another escalation between the U.S. and Iran.
The Fed is analyzing inflation levels and is likely to raise rates in September. Going forward, the dollar may strengthen against the backdrop of a clear and well-defined regulatory strategy.
The key is safe investments. Predictability will no longer exist in 2026; economic growth has stalled, and oil prices are constantly fluctuating. Investors need a cautious strategy aimed at preserving capital.
The focus is on comfortable diversification of the investment portfolio. The investor’s main task is to make cautious and reliable investments in the major currencies: the dollar and the euro. Up to 10% of savings can be set aside for short-term investments in foreign-currency government bonds.
The focus is on liquidity. The dollar and the euro remain the logical foundation for foreign-currency savings.
In the fall of 2026, one could choose a currency allocation of 70% to 30% with a higher share of the dollar, or a “60%–20%–20%” split, where the dollar accounts for the largest share, 20% is in euros, and 20% is in Swiss francs or British pounds sterling.
Hryvnia-denominated instruments are intended for short-term investments and only on the condition of flexibility. The NBU forecasts that inflation will slow to below 7% next year. However, the risk of inflation exceeding 10% per year remains. Hryvnia deposits with an annual interest rate of 12–15% are a high-yield instrument, but currency still plays a key role in preserving investors’ capital, given its liquidity and reliability.
Pay closer attention to decisions by the U.S. and EU central banks and to inflation data. A timely analysis of the economic situation in the eurozone and the U.S. will allow you to adjust your strategy and update your long-term foreign currency savings plan without risk.
The euro is becoming increasingly sought after in the investment market. It is important for investors to make timely investments in the euro, which is currently strengthening rapidly. Some strategies may even call for shifting out of the dollar in favor of the euro this fall, followed by a 50-50 split of investments between these currencies.
What’s important in the news. September is the very “moment of truth” when it will become clear where key currency exchange rates are actually headed and at what levels they may end 2026. Therefore, decisions by the U.S. and EU central banks regarding changes to the base rate appear to be crucial. The geopolitical backdrop remains a key factor, particularly given the significance of the conflict between the U.S. and Iran for the energy market and oil prices. In Ukraine, it is important to closely monitor all new developments regarding changes to the tax framework, mobilization efforts, and the projected volume of aid receipts in 2027. Other factors influencing the situation will include international reserves and damage resulting from massive enemy attacks, particularly in the energy sector.
This material was prepared by analysts at KYT Group, an international multi-service product-based FinTech platform, and reflects their expert, analytical, and professional judgment. The information presented in this review is for informational purposes only and should not be construed as a recommendation for action.
The company and its analysts make no representations and assume no liability for any consequences arising from the use of this information. All information is provided “as is,” without any additional guarantees of completeness, obligations regarding timeliness, or updates or supplements.
Users of this material should independently assess risks and make informed decisions based on their own evaluation and analysis of the situation using various available sources that they themselves deem sufficiently reliable. We recommend consulting with an independent financial advisor before making any investment decisions.
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