Ukraine is seriously thinking about changing the main foreign currency it links its national money, the hryvnia, to. For a long time, Ukraine used the US dollar as its key reference currency. This means when Ukraine’s central bank managed its money system, it used the dollar to guide how much the hryvnia should be worth. But now, Ukraine is considering switching to the euro instead.
This big decision comes as Ukraine continues to build stronger connections with Europe. The country has started talks to join the European Union, and European countries are stepping up efforts to help Ukraine in its defense needs. On the other hand, Ukraine has faced some tough moments with the US in the past, including times when military help was paused.
The head of Ukraine’s central bank said that the world is changing. With more trade troubles globally and growing uncertainty in financial markets, Ukraine needs to think carefully about whether sticking with the dollar is the best option. The euro, which is used by many European countries, is becoming more common in Ukraine’s financial system, although the dollar still rules most international deals.
China’s Historic Dump of $53 Billion US Treasuries is Unprecedented Blow to US Economy
War, Money, and Market Changes
Ukraine’s money story changed a lot after Russia invaded in early 2022. Back then, to keep things stable, the central bank fixed the hryvnia’s value at about 29 per US dollar. This move was meant to prevent wild swings in the value of Ukraine’s money during the crisis. But soon, Ukraine had to adjust this rate as financial pressures built up.
By late 2023, Ukraine decided to move away from a strict peg to the dollar and switched to a more flexible system. Even with this change, the dollar remained the main reference point. However, the share of deals done in euros inside Ukraine has been quietly growing.
Other countries in the region are making similar moves. For example, Moldova, which is also trying to join the EU, recently switched its main reference currency from the dollar to the euro. This change reflects a bigger trend as countries look to align more with Europe while the world economy becomes more divided.
Ukraine’s Battle and Budget
As Ukraine’s war with Russia enters its fourth year, the country relies heavily on financial help from other nations. For 2025, Ukraine expects to get around US$55 billion in external funding. This money is crucial. It not only helps pay for the war effort but also supports the country’s budget and creates a financial cushion for the future, especially since aid from abroad might start shrinking in the coming years.
Ukraine’s leaders believe that their economy could slowly recover if the war situation improves. Right now, closer ties with Europe are giving a slight boost to investment and shopping activity inside the country. Growth is expected to tick up over the next couple of years, but the fighting with Russia still casts a large shadow.
Though the US dollar is still the king in global trade and finance, its value has dropped in recent months. Experts note that while the dollar remains dominant, its future as the world’s top currency faces more questions, especially as global politics and trade relationships shift. For Ukraine, the choice between sticking with the dollar or moving closer to the euro is a complicated one that will take time and careful planning.
For now, the world watches as Ukraine weighs this major financial step while continuing its struggle on the battlefield and its journey toward deeper ties with Europe.
