The National Bank of Ukraine (NBU) is considering the possibility of transitioning from the US dollar to the euro as the main currency peg. This hypothetical scenario is driven by a number of factors affecting the country’s currency policy.
This is reported by Finway
Factors for Changing the Currency Peg
NBU Chairman Andriy Pyshny noted that Ukraine’s potential accession to the European Union, the growing role of the EU in ensuring Ukraine’s defense capabilities, and increased volatility in global markets necessitate a reassessment of the euro’s role as the base currency for the hryvnia instead of the dollar. “Greater volatility in global markets and the likelihood of fragmentation in global trade” are significant arguments for this move.
Prospects for Economic Growth
According to Pyshny, a revival of investment and consumer activity, which may occur due to closer ties with Europe and economic normalization, will contribute to economic growth, which is projected to rise to 3.7-3.9% over the next two years.
“This work is complex and requires high-quality, comprehensive preparation” – Andriy Pyshny.
It is worth noting that after Donald Trump’s return to the presidency of the United States, the dollar (.DXY) lost more than 9% of its value compared to a basket of major currencies, as investors began to avoid American assets. Despite this, transactions in US dollars continue to dominate the currency market. However, as Pyshny emphasized, the share of transactions in euros is gradually increasing, albeit slightly.