Hryvnia Exchange Rate: Economist Sees No Sharp Fall, 2–3 UAH a Year
Ukrainian economist Oleh Hetman says the National Bank will let the hryvnia weaken by only 2–3 hryvnias this year. The dollar stood at 45.5 hryvnias on November 10, and he sees the rate near 50 by the end of 2029.
The exchange rate is under full control, and sharp currency swings should not be expected, economist Oleh Hetman said on November 10 as the dollar stood at 45.5 Ukrainian hryvnias. He forecast a controlled weakening of the hryvnia by 2–3 hryvnias per year, which could take the rate to around UAH 50 per dollar by the end of 2029.
Hetman coordinates the expert groups at the Economic Expert Platform and is an associate expert at CASE Ukraine. He said the National Bank of Ukraine (NBU), the country's central bank, will keep the hryvnia's decline gradual.
Where the rate stands
At the start of November the dollar traded at 45.5 hryvnias. On November 4 the NBU set the official rate at 45.66 per dollar, the highest level this month. The rate then stabilized and returned to 45.5 on November 10.
Managed flexibility, not a free float
Hetman said supply and demand no longer alone set the dollar rate. Under the current regime of managed flexibility, he said, the NBU effectively directs the rate and smooths out fluctuations.
The bank has the means to do so. According to Hetman, its gold and foreign-exchange reserves are close to $50 billion, so it can afford to do almost anything with the exchange rate.
He said the NBU follows its own reading of the macroeconomic situation. The Cabinet of Ministers also makes requests, but the central bank may ignore them if they conflict with that reading.
The trade gap behind the slow slide
Hetman pointed to Ukraine's trade imbalance. Exports run about $50 billion below imports each year, he said, and the gap keeps growing.
In his view, that gap can be narrowed only through a very slow devaluation, not a sharp or hysterical one. He said the hryvnia weakened by about one and a half hryvnias last year, and will lose 2–3 hryvnias this year, but no more.
"The NBU fully controls this process," Hetman said, adding that he expects no dramatic jumps and no rapid inflation or devaluation.
Inflation target and the outlook
Next year the rate may shift by another 1–2 hryvnias, Hetman said. By the end of 2029 the hryvnia could hypothetically reach around 50 per dollar.
The NBU's main goal is to contain inflation, he said. It aims to keep inflation within 5% and has not yet succeeded, but it will keep trying. To move toward that figure, Hetman said, the bank needs to hold the exchange rate within reasonable limits, letting the hryvnia lose only 1–2 hryvnias a year.
