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Ukraine is actively exploring a potential pivot away from the U.S. dollar, considering the euro as the new reference currency for its hryvnia amid shifting global economic alignments and strengthening European ties.
"Potential accession to the European Union, a strengthening of the EU's role in ensuring our defense capabilities, greater volatility in global markets, and the probability of global-trade fragmentation," are driving this reconsideration, stated Central Bank Governor Andriy Pyshnyi in a recent interview.
The timing coincides with significant dollar weakening. "Since Trump's return to the White House, the greenback is down more than 9% against a basket of major currencies as investors pull back from owning U.S. assets," Reuters reports.
Under President Trump, America has initiated what analysts describe as potentially the most aggressive tariff regime in a century. Meanwhile, Ukraine has experienced temporary interruptions in U.S. military assistance during its ongoing conflict with Russia, now in its fourth year.
Ukraine's hryvnia has historically used the dollar as its reference currency since its 1996 introduction. Following Russia's 2022 invasion, the central bank imposed capital controls, pegging the hryvnia at approximately 29 to the U.S. dollar before later implementing a managed exchange-rate regime.
"This work is complex and requires high-quality, versatile preparation," Pyshnyi emphasized about the potential currency shift, marking the most explicit acknowledgment by a Ukrainian official regarding this strategic reevaluation.
European integration appears increasingly central to Ukraine's economic planning. The EU commenced membership talks with Ukraine nearly a year ago, with EU President Ursula von der Leyen suggesting Ukraine could join by 2030 if reform momentum continues.
Ukraine's neighbor Moldova has already made this transition, switching its reference currency from the dollar to the euro on January 2 as part of its EU preparation strategy.
Despite dollar dominance in international markets, Pyshnyi noted that "the share of euro-denominated transactions has been rising in most segments though so far moderately."
Economic forecasts remain cautiously optimistic. "A revival of investment and consumer activity thanks to closer links with Europe and economic normalization would help economic growth pick up slightly over the next two years to 3.7% to 3.9%," Pyshnyi projected.
Ukraine continues relying on external funding for its war effort, expecting $55 billion this year. "We project Ukraine will receive about $17 billion in 2026 and $15 billion in 2027," Pyshnyi stated, acknowledging declining future aid volumes.
"A quick end to the war would clearly be a positive scenario with good economic outcomes if it were to incorporate security guarantees for Ukraine," he concluded. "Nevertheless, it's crucial to acknowledge that the economic benefits of ending the war would likely take time to fully materialize."
