Why the Dollar Is Being Held Artificially: Ukraine’s Central Bank Sold Over $1.3 Billion.

Ukraine’s Foreign Exchange Market Situation

According to TSN.ua: By March 23, 2023, the National Bank of Ukraine had sold more than $1.3 billion in an effort to stabilize the currency market and curb exchange rate fluctuations. This move came in response to rising demand for foreign currency and a cash market shortage. According to the central bank, total interventions since the start of March have exceeded $3 billion.

Cash market demand for foreign currency has jumped by nearly 45%. Meanwhile, the central bank’s key interest rate remains at 15%. Forecasts for the interbank dollar exchange rate stand at 43.5–44 UAH, while the cash dollar rate is expected to range between 43.75 and 44.25 UAH. The euro, according to projections, will likely trade within a 50–51 UAH range.

“The market situation remains tense due to a significant imbalance between currency supply and demand,” said Andriy Shevchyshyn.

Economic experts highlight key risks to the exchange rate, including:

• The situation in the Middle East
• Delays in international financial aid
• Domestic economic policy decisions

Under the baseline scenario, the dollar is expected to stay within 43.5–44 UAH on the interbank market, with the euro remaining between 50 and 51 UAH. In an alternative scenario, the dollar could rise to 44–45 UAH, while the euro might hover near 51 UAH or higher.

Central Bank Intervention and Its Consequences

The National Bank of Ukraine continues to actively intervene in the foreign exchange market to support the national currency amid growing demand and supply shortages. Given global economic challenges—such as the Middle East crisis and delays in international financial assistance—Ukraine faces serious risks to its currency stability. While central bank interventions are a critical tool for propping up the hryvnia, prolonged reliance on such measures could undermine market mechanisms. Experts advise monitoring developments closely, as they will shape the country’s economic outlook in the near future.