The dollar exchange rate on world markets is falling, while the euro, on the contrary, is rising. "Apostrophe" found out whether Ukrainians should get rid of American currency, and what they should invest in to protect their savings from depreciation.
The US dollar is falling against major world currencies, driven by the unpredictable and sometimes controversial tariff policies of US President Donald Trump, which could trigger a full-blown trade war in the near future.
In particular, the dollar fell to a three-year low against the euro. While in January the two currencies were almost equal, with 1 euro being worth 1.02 dollars, in mid-April the euro was worth almost 1.15 dollars.
And it seems that this is not the limit yet.
The dollar is also falling against the hryvnia, although not as quickly. However, the cash dollar exchange rate is currently at 41 hryvnia, while at the beginning of this year it exceeded 42 hryvnia.
The other side of the coin (or, rather, the banknote) is the proportional increase in the euro exchange rate. If in early April the European currency fell below 45 hryvnias, today it is worth more than 47 hryvnias.
Trust undermined
First, let's look at what is happening in the global foreign exchange market.
As noted above, the current volatility is directly related to the policy of US President Donald Trump to introduce (as well as suspend, cancel, and reintroduce) customs tariffs on imports from other countries of the world, and therefore further trends in global markets will one way or another be a projection of the actions of the current US presidential administration.
"All these actions undermine confidence in the American currency, even if everything (the tariffs introduced) rolls back and it will be as before ," Taras Kozak, founder of the investment company Univer, said in a comment to Apostrophe. " My point of view: as a result, the share of international trade in euros will grow. This means that the demand for the euro will be greater, and it, accordingly, may continue to strengthen."
At the same time, the euro to dollar exchange rate has more or less stabilized over the past week.
"The euro is growing situationally, because Europeans are taking their capital out of America, selling off American stocks, bonds, other American assets, transferring it to euros to buy gold, some European assets, or simply cashing out ," financial analyst Andriy Shevchyshyn tells the publication. "But I believe that the euro has reached a certain point on the world market. Europe cannot have such a strong euro for long, and it will be forced to adjust it."
Euro equation
Global trends affect the situation on the Ukrainian foreign exchange market.
There are certain nuances to this.
"The current growth of the euro against the hryvnia is not because the hryvnia has fallen against the euro, but because the euro has grown against the dollar in the world ," explains Taras Kozak. " But, again, we don't know what Trump will surprise us with tomorrow - this is the uncertainty of today's geopolitics and macroeconomics. And to say that in the long term - within three to five years - the euro will definitely grow against the dollar is also not worth it, because Europe has its own problems."
He recalled that the National Bank of Ukraine sets the hryvnia exchange rate to the dollar, and the hryvnia exchange rates to other foreign currencies are determined through their cross rates to the dollar.
"The National Bank smooths out fluctuations in the dollar-hryvnia exchange rate. For 30 years, the dollar has been the main foreign currency in Ukraine, and this habit is very difficult to change, " says the expert. " But the National Bank, understanding that we are moving towards Europe, that the European Union is our main trading partner, and that later we will have to provide our internal settlements in euros, may (after some time) smooth out not the dollar/hryvnia exchange rate, but the hryvnia exchange rate to the bi-currency basket."
Let's add to this that the National Bank is now considering an even greater orientation towards the euro, taking into account the factor of Ukraine's European integration.
"Within the framework of specialized working groups operating at the National Bank, we are working on the prospect of a comprehensive transition to the euro. Of course, this will not happen in the short term," said Yuriy Heletii, Deputy Chairman of the NBU, recently.
Diversification and common sense
So, we've sort of figured out the trends. But what should ordinary Ukrainians do who may have small savings and don't want those savings to depreciate?
"The traditional recommendation is: keep your eggs in different baskets - you need to have both euros and dollars, keep part of your savings in these two currencies. And in what proportions - everyone knows better from their own bell tower, but you need to have these two baskets," says Taras Kozak.
In addition to foreign currency, experts also advise buying domestic government bonds (OVDP), both foreign currency and hryvnia. The yield on bonds denominated in foreign currency can be 2-4% per annum, and on hryvnia bonds - 11-17%.
"We need to diversify. The hryvnia is about a three-month cash reserve. Inflation is high and accelerating. Perhaps it is worth looking at what was not bought before - hryvnia government bonds are definitely profitable , - says Andriy Shevchyshyn. - Just having dollars and euros in the account is, of course, interesting, however, you can consider foreign currency government bonds that will bring at least some income. And, yes, - partly (savings) in euros, partly in dollars, since the Ukrainian economy is not so strong that such a strong exchange rate will remain under current global trends. Therefore, in the medium and long term, the hryvnia will weaken, although now the National Bank has the opportunity to restrain (the fall)."
"I definitely wouldn't recommend dollars right now , " investment banker and financial analyst Serhiy Fursa expressed his point of view in a conversation with "Apostrophe." " Therefore, partially (invest) in hryvnia-denominated government bonds, because they have high profitability, plus we see that the National Bank definitely has no intention of weakening the hryvnia much this year. As for the part that is not in hryvnia, it is either the euro or the Swiss franc . "
Is crypto the new gold?
With traditional currencies, it's clear. But what about cryptocurrencies? Maybe it makes sense to invest in them to prevent your savings from depreciating?
"Some say that crypto is digital gold, but we saw how it performed badly in the first test during this crisis, " says Taras Kozak. " Real gold has grown because it is really the asset of last hope, while crypto has fallen, like everything else."
"This is a speculative instrument that is similar to a casino ," adds Serhiy Fursa, " And given that we are approaching very turbulent times in the global economy, speculative assets are the first to suffer in such times."
Recall that in January, the world's most popular cryptocurrency - Bitcoin - cost over $100,000, but now it is selling for less than $85,000, and in early April, shortly after Trump announced import tariffs, the value of Bitcoin dropped to $75,000.
But gold is steadily rising in price despite the crisis. However, it is worth remembering that it is an illiquid asset, meaning it is intended for long-term savings and it is quite difficult to quickly turn it into cash.
Just like real estate. Especially since it is unclear how real estate prices will behave in the event of a global recession (as well as a possible end to the war in Ukraine).
However, if someone has long wanted to make some serious purchase - for example, buy a washing machine, refrigerator, or computer, and has accumulated some savings, now is the time to do it.
