The USD to UAH exchange rate has been experiencing fluctuations, recently observed near 90-day lows of 41.16. This marks a 1.0% decline from its 3-month average of 41.61, with trading confined within a stable range of 1.7% from 41.16 to 41.88. Analysts attribute this downward trend to a mixed trading environment influenced by rising US jobless claims and the overall risk-off sentiment that is shaping market dynamics.
The recent strengthening of the US dollar, driven by robust manufacturing and services PMIs, has been temporarily offset by speculation surrounding Federal Reserve Chair Jerome Powell's upcoming keynote speech. Should Powell convey a dovish policy outlook, it could lead to a depreciation of the USD. Factors such as the ongoing transition in Federal Reserve leadership and anticipation of inflation data are presently pivotal in shaping USD valuations. Moreover, geopolitical tensions, particularly surrounding U.S.-China trade negotiations, are contributing to market uncertainty.
On the Ukrainian side, the National Bank of Ukraine (NBU) is maintaining a key policy rate of 15.5% to ensure currency stability and manage inflation expectations. This strategy reflects the central bank's cautious approach amid projected slower GDP growth for 2025. Recent forecasts from the International Center for Ukrainian Studies (ICU) indicate a slightly improved UAH/USD exchange rate projection, anticipating the exchange rate could reach around 43.5 by year-end, fueled by expectations of increased external financial support.
As Ukraine navigates potential shifts away from the U.S. dollar towards the euro, influenced by geopolitical considerations, the UAH's stability in the face of domestic economic challenges will be crucial. The combined effects of U.S. monetary policy shifts and Ukraine’s economic strategies will likely play a significant role in determining the USD to UAH rate in the coming months.
