Pegging the hryvnia exchange rate to the euro instead of the dollar is logical considering Ukraine's European integration.
This is stated in an article by Apostrophe.
As a reminder, the National Bank of Ukraine (NBU) has announced that it is considering "unpegging" the hryvnia exchange rate from the US dollar and pegging it to the euro.
"The reason for this is obvious - European orientation and potential integration into the EU. The idea of switching to the euro (in terms of exchange rate formation) has been around for a long time, and it was discussed even before the war, as the number of transactions with the euro has increased significantly. Therefore, this is a logical step, and it is also necessary for European integration processes," financial analyst Andriy Shevchyshyn told Apostrophe.
According to Vitaliy Shapran, an economist and former member of the NBU Council, the euro should theoretically become a more popular currency in Ukraine, firstly, because of our European integration, and secondly, because of the expansion of the euro zone itself.
"The timing of this transition will depend on the speed of both processes. Another important factor will be the intensity of the EU's involvement in Ukraine's recovery. All these processes are long-term and will take more than one year," the expert explained to the publication.
The reorientation of the exchange rate from the dollar to the euro will not fundamentally change anything for ordinary Ukrainians, says Andriy Shevchyshyn.
"The euro will be more popularized within the country as a savings currency, a currency of conversion," he added.
For the economy, pegging to the euro is also likely to be positive: "It will be much easier to conduct European integration processes and European contracts and service them. I do not see any significant disadvantages. The only thing is that the cash flow will need to be restructured, and initially this will cause a headache for the banking sector. This also applies to state reporting and other parameters, such as interbank transactions."
Earlier, "Apostrophe" reported that the NBU may refuse to use the US dollar as the main currency of the exchange rate peg.