Hryvnia value against the mighty dollar

Today Ukraine’s central bank depreciated the hryvnia by 25% against the dollar. It was due to the effects of the war with Russia. The new hryvnia exchange rate is at 36.5686 to the dollar.

The decision to act so drastically was because the fundamental characteristics of the Ukrainian economy changed during the war. They have also taken into consideration the rise of the US dollar against other currencies. The bank thinks that the devaluation will help Ukrainian manufacturers’ competitiveness. They assume it will also promote the stability of the economy in times of war.

The devaluation occurs just one day after Ukraine requested a two-year payment suspension on its international debts from its creditors in an effort to concentrate its depleting financial resources on fending off Russia. According to data from the World Bank, Ukraine had an outstanding external debt of $130 billion as of the end of 2020.

The debt ban would apply to almost $20 billion in international bonds issued by Ukraine. They are denominated in dollars and euros and have maturities between 2022 and 2030. Ukraine’s GDP is predicted to collapse by 35–45 percent in 2022 as a result of the war.

Ukraine and EU : Hryvnia to USD

Ukraine has not yet achieved this requirement. In order to fully join the EU, a country must: be deemed to be economically stable (as determined by the EU); denationalize its own currency; agree to changes in its banking system (per EU Rules); support the political, economic, and monetary goals of the EU; and have a majority of its citizens express their desire to join the EU through a vote or referendum. EU membership is not yet a priority for Ukraine. Although the adoption of the Euro as a national currency is somewhat flexible, Ukrainians are quite likely to question and/or resist any EU limitations that appear to limit Ukraine’s independence.

You might be able to profit from some speculation if there is a brief increase in value. Volatility is great for speculating. Day traders and others adore it. However, some don’t think of that kind of trading as investing. Avoid using the hryvnia if you are actually looking to invest and not speculate. Its long-term trajectory has always been downward, and the harm this war has caused to the Ukrainian economy won’t make things better. The hryvnia might strengthen for a while before falling again if the EU injects money without requiring it to be repaid at any point.

For years, a brain drain from other countries has hurt the Ukrainian economy. Foreign nations have accelerated it by now issuing work permits to those who would previously have been refused them. It will only have encouraged that to continue during the war.

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