Ukraine is preparing to drop the US dollar as an anchor money and replace it with euro, as Central Bank Governor Andriy Pyshnyi confirmed.
In a written statement to ReutersPyshnyi has reportedly said that this decision has come while Ukraine has been talking to a fourth year of the entire war with Russia and is still dependent on economic cooperation and European defense.
She is said, “This work is complicated and requires high quality, versatile preparation,” which is called a significant evaluation process that is already being carried out. Pyshnyi explained that the Euro could replace the dollar as a central reference for Hryvnia, Ukraine's national currency.
The change is being studied for many factors: the possibility of joining the European Union, growing an establishment in the global financial system, and increasing trade fractures worldwide. Pyshnyi said EU's defense and support role for Ukraine makes the Euro more attractive than dollars.
To date, the dollar is still driving international transactions, but Pyshnyi noted that euro denomination deals are slowly gaining land in most market parts.
Trump's tariffs and dollars were added to Kyiv's rush
The decision arrived at a time when President Donald Trump, who returned to the White House, slapped aggressive tariffs on imports. These tariffs, some of which are called the highest in a hundred years, have asked many countries if the dollar should remain money in the world reserve.
Since Trump's return, the dollar index (.dxy) lost more than 9% compared to other major currencies. Investors are now pulling from dollar -based assets.
Ukraine doesn't just look at money from an economic stance. The country is also responding to a temporary refreement with military assistance from the US, a decision made by Trump. Meanwhile, European leaders have promised the public to help the Ukraine army stay stable, but the actual delivery of the foreground has been slow.
Ukraine also signed a deal with Washington giving the US a preference for accessing mineral resources, tied to funding the rebuilding.
Pyshnyi acknowledged that while the dollar is still dominant in the currency markets, euro use is growing. “The US dollar transactions continue to rule over all FX market segments,” he said. “But part of the euro denomination transactions is rising in most segments, even now is moderate.” He did not go in more detail.
Ukraine adjusts the money strategy as the EU membership talks continue
Ever since it launched in 1996, Hryvnia has always been tied to dollars. That changed after Russia's attacker in February 2022. Ukraine locked its money on the dollar at an official rate of 29, trying to avoid the flight of capital.
But due to the development of fiscal imbalances, the central bank was forced to reduce hryvnia. In October 2023, Ukraine moved to a managed exchange rate regime, which still uses the dollar as its reference, primarily to guide foreign exchange interventions and to manage market swings.
That system may not last long. Pyshnyi confirmed that the National Bank is now studying if the Hryvnia peg is completely transferred from the dollar to the euro. If adopted, it will change how the bank controls the money and holds the reserves.
The EU opened the members of the membership in Ukraine and Moldova about a year ago. Although the process is long and full of political requirements, it moves. In February, EU Commission President Ursula Von Der Leyen said Ukraine could join 2030 if the reforms continued. Moldova transferred its own money from dollars to Euro on January 2, 2025.
Pyshnyi said that if Ukraine continues to build its relationship with Europe, it can boost consumer investment and demand. He foretold that it would help with economic growth of 3.7% to 3.9% over the next two years. But he also said that most outcomes depend on how war performs.
To support its budget and fund the war, Ukraine is highly relying on out of financing. Pyshnyi said he hopes Ukraine will receive $ 55 billion in this year's external funds. That money will not only cover the deficiency in 2025. It will also be used to create a financial pillow for the coming years, especially since Ukraine has been preparing for a fall to foreign assistance.
“We Project Ukraine will receive nearly $ 17 billion in 2026 and $ 15 billion in 2027,” Pyshnyi said.
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