Monetary Policy Stance of the National Bank of Ukraine
The National Bank of Ukraine (NBU) has decided to keep its key policy rate unchanged at 15% per annum, signaling its commitment to maintaining monetary stability amid the current economic landscape. Data shows that in June 2023, the daily gap between demand and supply of foreign currency widened to $147 million. For context, this gap stood at $107 million per day in May and $118 million per day in April.
The hryvnia exchange rate has stabilized within a range of 44.8 to 44.9 UAH per US dollar. Net demand from households for cash foreign currency reached approximately $19 million per day in June. In April and May, this figure fluctuated between $14 million and $20 million per day, while in March it peaked at $44 million per day.
Outlook for 2025
Ukraine's 2025 budget assumes an exchange rate of around 45 UAH per US dollar, though the projected average rate for the full year is 41.7 UAH per dollar. The NBU's inflation target remains set at 5% over the policy horizon.
Andriy Pyshnyy commented on the NBU's decision, stating: 'This move ensures sufficient tightness in current monetary conditions, while also accounting for robust demand for hryvnia savings instruments and a reduction in risks tied to the conflict in the Middle East and insufficient external financing.'
By holding the key rate at 15%, the NBU aims to keep inflation risks in check and stabilize the foreign exchange market amid growing currency demand. The hryvnia's exchange rate dynamics and the demand for cash foreign currency suggest that households and businesses are adopting a cautious approach to their financial planning. At the same time, the dollar exchange rate forecasts embedded in the 2025 budget reflect the government's efforts to chart economic policy in an environment of uncertainty, particularly regarding external financial factors.
As the National Bank of Ukraine maintains its key rate, it's essential to consider the broader context of currency fluctuations. Recent data reveals significant movements in exchange rates, particularly the rise of the U.S. dollar and Polish zloty. To understand how these changes might impact your financial decisions, explore the latest updates on current exchange rates in Ukraine.