US dollar strengthens against most currencies, NBU flags geopolitical risks | Ukraine news

Rising geopolitical tensions pushed the US dollar upward against most currencies, sparking concern over inflationary pressure in Ukraine.

In recent weeks the US dollar has risen against most world currencies, mainly due to rising geopolitical uncertainty and the turbulence associated with it in the financial and commodity markets.

This was reported by the head of the National Bank of Ukraine, Andriy Pyshny, during a briefing at the regulator.

At the same time, the hryvnia’s exchange rate against the euro and many other currencies of Ukraine’s main trading partners changed only modestly, according to the head of the National Bank.

“Russian aggression remains the main risk, creating threats to price dynamics and economic activity in Ukraine. At the same time, in recent months, risks related to the intensification of geopolitical confrontation in the world have intensified”

Potential scenarios and impact on the economy

According to him, if the war in the Middle East lasts for a long time, world prices for energy resources are likely to deviate significantly from the National Bank’s forecasts. On the one hand, this would further strengthen inflationary pressure in Ukraine; on the other hand, it could complicate Russia’s financial resources to continue a full-scale war.

However, according to assessments from the regulator’s higher echelons, the growing involvement of the European community in supporting Ukraine preserves the probability of realizing more optimistic scenarios. They envisage stronger military and financial assistance from partners.

“Since the beginning of the year, Ukraine has received $5.5 billion in official financing. Thanks to these inflows, the government has been able to finance all critical budget expenditures and preserve cash reserves to cover future budget needs. International reserves have remained at a high level and by the end of February stood at about $55 billion. This level of reserves supports the NBU’s ability to ensure currency market stability”

In light of these data, the National Bank emphasizes that reserves and international support ensure currency stability during geopolitical tension and potential fluctuations in global prices.