Dollar exchange rate in Ukraine: why December will be the most volatile month of the year

Dollar exchange rate in Ukraine: situation in December 2023

The dollar exchange rate in Ukraine continues to rise, and December 2023 may become the most volatile month of the year. This situation is caused by energy problems in the country and seasonal factors. Since October 2023, a managed flexibility regime for the exchange rate has been introduced in Ukraine, which has affected the dynamics of the dollar exchange rate.

It is noteworthy that in October 2023, the official dollar exchange rate rose from 41.14 to 41.97 hryvnias. As of November 21, 2023, the dollar exchange rate reached 42.15 hryvnias. Throughout the year, the dollar exchange rate fluctuated, particularly in January 2023, it was 42.28 hryvnias. The current discount rate in Ukraine is 15.5%, while the country's international reserves amount to 50 billion dollars.

Forecasts and seasonal fluctuations

Particular attention should be paid to seasonal fluctuations in currency demand. In December 2024, currency demand exceeded supply by 30-40%, while in December 2023, this figure is expected to be at 15-20%. In the context of a changing economic situation, experts predict that the dollar exchange rate may range between 43-43.5 hryvnias per dollar.

Economist Taras Lesovyi notes that the energy situation will primarily pressure the market. 'This is not only a safety cushion but also a real tool for the NBU to smooth out market distortions'.

Forecasts for the dollar exchange rate in the coming years indicate that in 2026 it may reach 45.4 hryvnias per dollar, and in 2027 – 47.5 hryvnias. It is also expected that the dollar exchange rate will not exceed 48 hryvnias in 2026-2027. Ukraine also expects to receive more than 45 billion dollars in external support in 2026 and about 39 billion dollars in 2027.

Thus, December 2023 promises to be particularly challenging for the currency market in Ukraine, given the existing energy problems and changing currency demand.

The situation in the currency market of Ukraine underscores the importance of economic stability in the face of external and internal challenges. The rise in the dollar exchange rate in the context of an energy crisis and changing currency demand may have serious consequences for businesses and consumers. The government and the National Bank of Ukraine must find effective solutions to mitigate currency fluctuations and maintain economic stability in the country.