Ukraine may be rethinking its currency strategy, potentially shifting away from the U.S. dollar and anchoring its national currency to the euro. In an interview with Reuters, National Bank of Ukraine Governor Andriy Pyshnyi explained that this move is being considered due to shifting geopolitical dynamics, growing fragmentation in global trade, and deepening ties with Europe.
According to Pyshnyi, Ukraine’s potential EU accession, the increasing role of the European Union in supporting the country’s defense, market volatility, and a broader trend of global trade division are all prompting the central bank to assess whether the euro should become the reference currency for the hryvnia instead of the dollar. As Reuters notes, these are the most direct public statements yet from a Ukrainian official on this matter.
“This work is complex and requires high-quality, versatile preparation,” Pyshnyi emphasized in written comments.
He also revealed that the topic was first raised in February 2024 during a meeting of the central bank’s oversight board.
Why the Dollar May Be Losing Ground
Despite the U.S. dollar’s continued dominance in global trade and as the primary reserve currency—used by economies like Saudi Arabia and Hong Kong—more countries are exploring diversification. One catalyst: Donald Trump’s return to the White House and the initiation of what Reuters calls potentially the highest tariffs in a century, triggering a new trade war and sowing doubts about the dollar’s role as a global reserve currency.
Ukraine, too, has had a complicated experience with the Trump administration, which temporarily cut military aid during his previous term. Now, in the fourth year of the war with Russia, Kyiv is looking more decisively toward Europe.
“Certainly in Ukraine’s case, its destiny is tied to Europe and European defence,” said Phoenix Kalen, head of emerging markets research at Societe Generale. “From that angle, all the economic and political aspirations are still going to be very much tied to the euro, so I think it makes sense for many reasons why they would want to consider this shift.”
The EU as an Anchor and Strategic Orientation
Ukraine and Moldova began official EU accession talks in 2023, but the path to full membership remains long and demanding. European Commission President Ursula von der Leyen stated in February 2024 that Ukraine could join the EU by 2030—if it maintains its current pace of reforms.
Moldova has already taken a concrete step in this direction: on January 2, 2024, it switched its reference currency from the U.S. dollar to the euro. Ukraine is still in the research and planning phase but appears to be moving in the same direction.
After Russia’s full-scale invasion in February 2022, Ukraine imposed strict capital controls and fixed the exchange rate at 29 hryvnias to the U.S. dollar. However, with rising fiscal imbalances, the hryvnia was later devalued. In October 2023, Ukraine adopted a managed exchange rate regime—still using the dollar as the main reference for foreign exchange interventions and stabilization.
Although the U.S. dollar continues to dominate Ukraine’s currency market, the share of euro-denominated transactions is steadily growing, albeit moderately, Pyshnyi noted without providing details.
As Reuters highlights, the U.S. Treasury did not respond to a request for comment.
The U.S. Role Persists—but Not Unquestioned
Ukraine is not turning its back on the United States. In fact, it recently struck a deal giving U.S. companies preferential access to new mineral extraction projects in Ukraine and an opportunity to invest in the country’s postwar reconstruction.
Still, Trump’s re-election has caused concern in Kyiv. According to Reuters, the dollar has dropped more than 9% against a basket of major currencies since Trump took office again, as investors scale back on U.S. assets.
Some experts argue that the dollar’s strength is not synonymous with its status as a reserve currency. Yet historically, that status has been closely tied to U.S. security and military alliances. Ukraine appears to be seeking strategic resilience by turning toward Europe.
Ukraine’s Economy: Between War and Recovery
Assuming closer ties with Europe and gradual normalization of the economy, Pyshnyi predicts Ukraine’s GDP could grow by 3.7–3.9% over the next two years. However, much depends on the outcome of the ongoing war.
“A quick end to the war, especially if it includes security guarantees for Ukraine, would clearly be a positive scenario with good economic outcomes,” he said. “Nevertheless, it’s crucial to acknowledge that the economic benefits of ending the war would likely take time to fully materialize.”
Ukraine continues to rely heavily on foreign financial assistance. In 2025, the country expects to receive around $55 billion in external funding. These funds are intended not only to cover the current budget deficit but also to build a reserve for future years, when aid is expected to decrease.
“We project Ukraine will receive about $17 billion in 2026 and $15 billion in 2027,” said Pyshnyi.
This article was prepared based on materials published by Reuters. The author does not claim authorship of the original text but presents their interpretation of the content for informational purposes.
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