The National Bank of Ukraine has announced plans to move away from a fixed hryvnia exchange rate against the dollar and to adopt a flexible, floating rate instead. This shift marks a major change in how the currency is managed amid evolving economic conditions. The move was reported by RBC-Ukraine, highlighting the central bank’s strategic goal to align monetary policy with real market dynamics rather than maintain a rigid peg.
The central bank explains that the fixed rate and the earlier strict controls on the foreign exchange market served a purpose at the outset, providing stability during a period of heightened uncertainty. Yet, over time, those same measures began to constrain the economy, with frictions arising from limited price discovery, distorted capital flows, and an insufficient mechanism to absorb shocks. By signaling a transition to a flexible regime, the NBU aims to restore full currency flexibility, letting market forces help determine the value of the hryvnia while still using targeted interventions to cushion extreme volatility.
In its statement, the bank noted that after roughly a year and a half of relative stability, the time has come to terminate the interim arrangement and implement a dynamic exchange rate system. The new framework is intended to reflect changing macroeconomic conditions, including shifts in trade balances, inflation expectations, global commodity prices, and capital movement.
The regulator emphasizes that a floating rate will enable quicker adaptation to surprise developments and structural changes, improving overall policy credibility. At the same time, the bank plans to use calibrated currency operations to smooth abrupt swings, preserving financial stability while allowing the market to absorb impulses and signals from real activity, inflation data, and external conditions.
Looking back, the currency path has shown notable movements. At the start of 2022 the hryvnia’s rate against the dollar was anchored at a level chosen by the authorities, and by mid-2023 the currency experienced a pronounced depreciation as external shocks and domestic factors shifted the outlook. The path of the exchange rate has remained closely watched by businesses and households alike, influencing everything from pricing decisions to import costs and consumer confidence.
These developments come amid broader conversations about the pace of reform in monetary policy, the resilience of financial markets, and the channels through which currency risk is managed. The shift to a flexible exchange rate is presented as part of a broader framework to enhance monetary transmission, improve policy responsiveness, and reduce the likelihood of sharp, destabilizing moves that could affect the real economy. The central bank signals its commitment to a transparent, rules-based approach, where interventions are used to support orderly functioning without undermining the price discovery process.
The transition will be implemented in stages, with ongoing monitoring of external and internal conditions, consultation with financial institutions, and careful communication to minimize surprises for market participants. Economic actors are advised to prepare for a period of adjustment as the market learns to price risk under a regime where supply and demand interact more freely. All observers recognize that the path may include periods of heightened volatility, but the overarching objective remains steady macroeconomic management and sustainable growth.
It is expected that the new system will provide better insulation against external shocks, while preserving the ability to respond promptly to exceptional events through targeted interventions. In practice, the central bank will continue to monitor inflation pressures, current account dynamics, and capital flows, adjusting policy tools as necessary to maintain price stability and financial sector resilience.
As the transition unfolds, businesses, financial institutions, and households will be watching closely how the exchange rate responds to domestic data releases, international developments, and policy communications. The ultimate aim is a currency regime that supports investment, competitiveness, and long-term economic health while reducing the likelihood of abrupt, destabilizing movements in the exchange value.
Note: This summary reflects reported developments and the central bank’s public communications that describe the rationale and expectations surrounding the shift to a floating exchange rate. Citations: RBC-Ukraine.