The USD to UAH exchange rate is currently bullish, trading at 90-day highs near 43.17.
Key drivers include:
- The interest rate differential has widened, as the U.S. Federal Reserve is expected to consider rate cuts in the coming years while Ukraine's National Bank maintains a high key policy rate of 14.5% to combat inflation.
- Geopolitical tensions, including recent U.S. actions in Venezuela, may increase risk aversion, impacting currency sentiment.
- The U.S. labor market remains strong, with unemployment falling to 4.4%, which bodes well for USD demand.
In the near term, analysts predict the USD to remain in a range benefiting from current strengths but potentially facing fluctuations.
An upside risk could stem from stronger-than-expected U.S. economic data, while a downside risk may arise from changes in Ukrainian economic stability or a significant geopolitical event that heightens uncertainty around the UAH.