Ukraine Considers Euro Peg as EU Ties Deepen and Dollar Volatility Grows
Ukraine is exploring the possibility of shifting the hryvnia’s reference currency from the U.S. dollar to the euro, as the country deepens its integration with the European Union and navigates growing global economic fragmentation.
The Gaze reports on this with reference to Reuters, citing the statement of Ukrainian National Bank Governor Andriy Pyshnyi.
Pyshnyi highlighted that the central bank has launched a comprehensive review of Ukraine’s foreign exchange policy. The reevaluation stems from several key factors: Ukraine’s bid for EU membership, heightened EU involvement in supporting Ukrainian defense, the rising instability in global financial markets, and a trend toward regionalization in international trade.
“This is a complex undertaking that demands robust and multifaceted preparation,” Pyshnyi noted. His remarks represent the most explicit signal to date from a Ukrainian official regarding a potential pivot away from the U.S. dollar.
Since the hryvnia’s introduction in 1996, the dollar has served as Ukraine’s main reference currency. However, the euro is gradually gaining traction. “Although U.S. dollars continue to dominate foreign exchange transactions, the share of euro-denominated operations is steadily increasing,” Pyshnyi said.
The move echoes broader shifts in the global financial landscape. While the dollar remains the dominant reserve currency, pegged to by economies like Saudi Arabia and Hong Kong, concerns over its long-term role have grown amid rising geopolitical tensions.
Ukraine’s central bank previously maintained a firm peg of the hryvnia to the dollar at around 29 after Russia’s full-scale invasion in 2022. However, that system was abandoned due to mounting fiscal pressures. Since October 2023, a managed exchange rate regime has been in place, using the dollar as the benchmark for interventions.
Inspired by Moldova, which adopted the euro as its reference currency in January 2024, Kyiv is watching closely as its own EU accession process continues.
As The Gaze reported earlier, Ukraine and the International Bank for Reconstruction and Development have signed a $70 million guarantee agreement aimed at enhancing the resilience of Ukraine’s energy system.