Overview and Forecast of the Hryvnia Exchange Rate Against Key Currencies by KIT Group Analysts

The March 2026 issue of the KIT Group report has become an essential stage for analyzing the currency market in Ukraine, as the situation remains tense and forecasts regarding the hryvnia's exchange rate attract significant interest from experts and investors. In this review, we will thoroughly examine the current conditions in the market, the dynamics of currency rates, key factors influencing the situation, and possible scenarios for future developments.

In the second half of March 2026, Ukraine's currency market continued to experience heightened turbulence. Although the hryvnia fell below 44 hryvnias per dollar once again, this was only possible due to active interventions by the National Bank of Ukraine, which conducted market interventions. This step was necessitated by the need to stabilize the national currency's exchange rate amid rising demand for foreign currency.

By the end of March 2026, the trajectory of exchange rate formation was influenced by several critical factors. Domestically, the primary factors included the ongoing rise in fuel prices and increased demand for currency in both the interbank and cash markets. External factors, particularly the war between Israel and the United States against Iran, also significantly impacted the situation, leading to rising oil prices. Investors, in turn, began to express skepticism regarding the swift resolution of the conflict, which contributed to the strengthening of the dollar.

The dollar continues to strengthen against the euro, with the DXY index indicating that the U.S. currency appreciated by 2.23% over the past month. At the March meeting, the Federal Reserve Committee (FOMC) maintained the federal funds rate in the range of 3.5% to 3.75%. This marked the second consecutive meeting without a decision to change rates. The Summary of Economic Projections (SEP) showed that the median forecast anticipates only one rate cut of 25 basis points by the end of the year, followed by another cut in 2027. Federal Reserve Chair Jerome Powell emphasized that inflation in the U.S. is already declining, although the labor market situation remains less optimistic.

Overall, external factors, including geopolitical tensions in the Middle East, lead to unpredictability in the currency market. The Federal Reserve also noted risks associated with volatility in the Strait of Hormuz, a critical route for oil delivery. Oil prices have risen amid diminishing hopes for de-escalation of the conflict with Iran, with Brent crude futures reaching $110 per barrel. This occurred after Tehran denied reports of possible negotiations with the administration of President Donald Trump.

The EUR/USD pair in March also reacted to external political tensions, with the U.S. dollar strengthening amid rising demand for safe assets. The dollar's exchange rate is supported by rising oil prices, fueling concerns about increasing inflation. At the beginning of March, the rate stood at 1.1766, while the last week ended at 1.1520. Investors likely do not believe in a swift resolution of the conflict with Iran, thus returning to the dollar as a safe asset. The dollar's positions are improving as the U.S., unlike Europe, Japan, and the United Kingdom, is a net exporter of energy resources.

In the Ukrainian currency market, March saw a significant increase in demand in both cashless and cash segments. The escalation of the conflict in the Middle East and regular attacks by the Russian Armed Forces on Ukrainian infrastructure led to a sharp rise in fuel prices, which, in turn, forced companies to plan for larger procurement volumes. Since Ukraine is almost entirely dependent on imported petroleum products, foreign suppliers are setting new prices, which raises demand for fuel and, consequently, for currency. The population of Ukraine, facing high uncertainty, is also becoming active in the currency market, as the war, the threat of rising fuel prices, and devaluation expectations stimulate demand for dollars. According to data from the National Bank of Ukraine (NBU), from March 2 to March 24, the population purchased over $1.9 billion, while currency sales during this period amounted to $1.1 billion.

The National Bank of Ukraine conducted several operations in March to exchange cashless currency of banks for cash to reinforce cash reserves. For instance, on March 25, the exchange at the request of one of the banks amounted to $50 million and €10 million. According to the NBU, overall, from March 9 to March 25, 2026, the currency supply within these operations significantly exceeded actual demand from banks, and no cash currency shortages were observed.

In the interbank currency market, the demand boom was noticeable in mid-March, but the National Bank of Ukraine quickly responded by increasing the volume of interventions. The currency shortage in the interbank market was eliminated, although the regulator had to significantly increase the volumes of interventions. According to available statistics from the NBU, from March 2 to March 20, the regulator sold over $3.15 billion in the market, while the total volume of interventions for February was $2.99 billion.

Regarding international financial assistance and credit programs, March was marked by active discussions surrounding the upcoming $8.1 billion program with the International Monetary Fund (IMF). However, the IMF expressed concerns about Ukraine's continued receipt of assistance within this package due to delays in the parliament's adoption of necessary laws. This underscores the importance of stability and transparency in Ukrainian legislation to attract international support.