Official exchange rate of Ukrainian hryvnia strengthens by 9 kopiikas on Thursday

The National Bank of Ukraine (NBU), after raising the official exchange rate of the hryvnia against the U.S. dollar by 1 kopiika on Wednesday, further strengthened it by 9 kopiikas on Thursday to UAH 42.1729/$1, according to data on the regulator's website.

The NBU set the indicative rate at noon on Thursday at UAH 42.1971/$1, compared to UAH 42.2650/$1 the previous day.

On the cash market, the dollar exchange rate dropped by 21 kopiykas for buying to UAH 42.61/$1 and by 17 kopiikas for selling to UAH 42.70/$1.

Meanwhile, analysts at the currency exchange market operator from KYT Group forecast that the hryvnia will remain within the UAH 42-43/$1 range in the near term, considering the stabilization process following the seasonal spike in currency demand at the end of 2024.

"Low economic and business activity in January will contribute to the stability of the exchange rate in the short term. Evidence of this is the relatively stable spread between the buying and selling rates for the U.S. dollar, indicating a balance between supply and demand in Ukraine's currency market," the analysts said in their January market review and forecast.

According to their projections, the hryvnia is highly likely to weaken to UAH 44/$1 during the first half of 2025, which aligns with the government's budgetary forecast for the year.

"Avoiding exchange rate extremes during the first half of the year will enable the NBU and the government's economic bloc to preserve their reserve capacity and stay within the projected average annual exchange rate of UAH 45/$1 by year-end," KYT Group experts said.

At the same time, they believe that controlled depreciation may become one of the tools to increase budget revenues through duties and other fixed collections in foreign currency, including certain excise taxes.