Ukraine devalues currency by 25% against greenback amid war

ANKARA

Ukraine's central bank on Thursday devalued the national currency by 25% against the greenback in order to protect its foreign exchange reserves as the ongoing war continues to batter its economy.

The move comes a day after it was reported that Ukraine had requested foreign debt payments from key creditors.

It altered the official exchange rate of the hryvnia to the US dollar by 25%, to UAH/USD 36.5686, according to a statement from the National Bank of Ukraine (NBU).

The decision was motivated by a shift in the fundamental parameters of the economy, it said.

"This step will improve the competitiveness of Ukrainian producers, converge exchange rate conditions for different groups of businesses and households, and support the resilience of the economy during the war," it added.

The adjustment of the official hryvnia exchange rate will have only a limited impact on the acceleration of price growth, the central bank asserted, adding that "instead, fixing the official rate at a new, more stable level will allow the NBU to keep price developments in Ukraine under control."

"Changing the exchange rate will raise inflows – and thus sales – of foreign currency revenues by exporters, minimize the speculative behavior of market participants, and allow stabilizing exchange rate expectations," the bank said.