Ukraine's National Bank fixes UAH/USD exchange rate by 25%

The National Bank of Ukraine has changed the official exchange rate of the hryvnia against the U.S. dollar by 25%, to UAH/USD 36.5686, effective 9 a.m. 21 July 2022.

The reasoning behind the decision was the shift in the fundamental parameters of the Ukrainian during the war and the strengthening of the dollar.

"This step will improve the competitiveness of Ukrainian producers, converge exchange rate conditions for different groups of businesses and households, and support the resilience of the economy during the war," the bank says in a statement.

"The new level of the exchange rate will become the anchor for the economy and make it more resilient at times of uncertainty. Keeping the exchange rate fixed will enable the NBU to maintain control over inflation dynamics and support the uninterrupted functioning of the financial system. This is the key condition for the stable operation of the economy, which is vital during the war," emphasized NBU Governor Kyrylo Shevchenko.

The NBU estimates changing the exchange rate will raise inflows — and thus sales — of foreign currency revenues by exporters, minimize the speculative behaviour of market participants, and allow stabilizing exchange rate expectations.