Ukraine’s central bank lets hryvnia weaken to record low as it steps up dollar sales
Ukraine’s National Bank sold more than $6 billion on the interbank foreign exchange market in October, allowing the hryvnia to weaken to a record-low official dollar rate. The central bank said it was covering a currency shortage and smoothing volatility rather than fixing the rate artificially, while avoiding a return to large-scale money issuance.
Key points
- The official dollar rate reached a record high of 45.6 hryvnias per dollar on October 28 and eased to 45.53 by October 30.
- The National Bank sold almost $6 billion in October, including $1.818 billion during the final week.
- Net business demand for cashless foreign exchange reached $230 million per day over the last five trading days of October.
- Businesses bought more than $9.5 billion of foreign currency in October, the highest monthly figure recorded.
- The cash dollar rate rose 2.3% during October to 46.04 hryvnias, while the official rate increased 1.5%.
- The National Bank raised its 2026 inflation forecast to 12.5% and increased the policy rate to 16.5%.
- Ukraine’s international reserves stood at $47.1 billion at the beginning of October.
Why it matters
The record official dollar rate increases pressure on domestic prices and import costs. The central bank’s increased currency sales and decision to permit two-way rate movements reflect efforts to address the private market’s dollar shortage without artificially pegging the hryvnia. At the same time, a higher policy rate and an inflation forecast of 12.5% indicate tighter monetary conditions amid elevated inflation. Partner financing is expected to cover state financing needs without a return to large-scale money issuance.
What happened
The National Bank eased its currency interventions in October as the hryvnia weakened, with the official dollar rate reaching a record 45.6 hryvnias on October 28 and standing at 45.53 by October 30. Banks quoted the dollar at 45.39–46.06 in the morning of October 30. The central bank sold almost $6 billion during the month, including $1.818 billion in the final week, to cover shortages in the interbank market and smooth volatility. Business demand reached a record monthly level, while net cashless demand rose to $230 million per day over the last five trading days. The central bank said partner financing should cover its needs and that it was avoiding large-scale money issuance, which it used to finance the deficit in 2022.
How Ukrainian sources describe it
Ukrainian coverage focuses on the record exchange rate, the National Bank’s explanation of its currency interventions, rising inflation and monetary tightening, and the decision to avoid large-scale money issuance. It also considers the adequacy of international reserves, which stood at $47.1 billion at the beginning of October, and the availability of partner financing.
Background
Annual inflation accelerated to 10% in September, and the National Bank raised its inflation forecast for 2026 to 12.5%. It attributed price pressure to the consequences of Russian attacks on businesses and infrastructure and to higher fuel prices. Company demand for import payments amid uneven export receipts was identified as an additional source of pressure on the hryvnia. The central bank financed the deficit through money issuance in 2022 but says it currently avoids returning to that approach on a large scale.