by Karin Strohecker and Olena Harmash

London (Reuters) – Ukraine is starting to consider moving away from the US dollar, possibly linking its currency more closely to the euro, in the context of the fragmentation of global trade and its growing links with the European Union, told Reuters Andrii Pyshnyi, governor of the Ukrainian central bank.

The possible membership of Ukraine to the EU, the increased role of Brussels as a guarantor of Kyiv’s defense capacities, the volatility of the global markets and the probability of a fragmentation of the trade obliges the Central Bank to wonder if the Euro should be the reference currency of the Ukrainian Hryvnia instead of the US dollar, he said in remarks sent by electronic mail.

“This work is complex and requires quality and versatile preparation,” added the governor, in the most direct comments to date on the part of a Ukrainian official on a possible change.

The greenback dominates international trade and represents most world reserves, and economies such as Saudi Arabia and Hong Kong attach their currency to the dollar.

However, since his return to the White House in January, Donald Trump has sparked a trade war by announcing what could be the highest customs duties for a century against his main partners, which led certain observers to question the future role of the dollar as a global reserve currency.

Ukraine, in war with Russia since Moscow invaded its territory in February 2022, also saw Donald Trump temporarily interrupting part of the military aid which was vital for its armed forces since the previous presidency of Joe Biden.

European leaders, including those of the EU, undertook to strengthen the army of Kyiv to become the cornerstone of future security in Ukraine, but the progress has been difficult.

Phoenix Kalen, analyst on emerging markets at Société Générale, considers that the deliberations of Ukraine on its reference currency are part of a wider scheme of states that try to rethink the way of aligning their geopolitical, security and commercial links in a changing world order.

“In the case of Ukraine, his destiny is certainly linked to Europe and European defense,” notes the analyst. “From this point of view, all economic and political aspirations will still be very linked to the euro, and I think it is logical, for many reasons, that they want to consider this change”.

Meanwhile, Ukraine and the United States have concluded an agreement which gives Washington preferential access to new transactions on Ukrainian minerals and which finances investments in the reconstruction of the country.

Since the start of Donald Trump’s second term in the White House, the greenback has lost more than 9% compared to a basket of reference currencies, investors getting rid of the American unscrew, yet long considered a refuge in times of crisis.

If some experts warn against associating the strength of the dollar with its reserve currency status, assets in dollars have historically been linked to security alliances and military links with Washington.

US dollars transactions continue to dominate all the segments of the exchange market, underlines the governor of the Ukrainian central bank, the transactions labeled in euros have increased in most segments, although “so far moderately”.

He did not give more details.

The US Treasury did not respond to a comment request.

The ambition to join the EU

Ukraine introduced Hryvnia in 1996 used the dollar as a reference currency for decades.

Immediately after the Russian invasion of 2022, the Ukrainian central bank imposed capital checks and set the Hryvnia at an official rate of approximately 29 for an American dollar. Subsequently, Kyiv was forced to devalue it due to the accumulation of budgetary imbalances.

In October 2023, the Central Bank went from a fixed parity regime to a managed key rate system which uses the US dollar as a reference, a stallion to measure interventions on the foreign exchange market and smooth fluctuations in the key rate.

Ukraine and Moldova, which both have ambitions for membership in the EU, began negotiations with Brussels almost a year ago, but the road is still long and strewn with pitfalls before these countries could reach the block.

The president of the European Commission, Ursula von der Leyen, also said in February that Ukraine could join the EU by 2030 if she continued to reform her political and judicial system at the current rate and level.

Moldova replaced the dollar with the euro as a reference currency for the official exchange rate of the Moldavian lei on January 2.

A resumption of investments and consumer activity thanks to closer links with Europe and economic standardization would help Ukraine’s economic growth to recover slightly over the next two years to reach 3.7-3.9%, defended Andrii Pyshnyi, although the economic trajectory depends largely on the evolution of conflict with Moscow.

“A rapid end of the war would clearly be a positive scenario with good economic results if it included security guarantees for Ukraine,” he said.

“Nevertheless, it is essential to recognize that the economic benefits of the end of the war would probably take time to materialize.”

Ukraine is counting on external funding to help them finance the war effort.

The governor said that he expected to receive $ 55 billion this year, which would not only cover the budget deficit, but also to build a public finance reserve for the years to come, when aid volumes are likely to decrease.

“We plan that Ukraine will receive around $ 17 billion in 2026 and $ 15 billion in 2027,” he said.

(Written by Karin Strohecker in London and Olena Harmash in Kyiv; Diana Mandia; edited by Augustin Turpin)

Copyright © 2025 Thomson Reuters