The sharp appreciation of the U.S. dollar since the beginning of 2026 has once again raised an important question for investors: can hryvnia-denominated investments still outperform simply holding cash in U.S. dollars?
From a mathematical perspective, the answer is straightforward.
Hryvnia investments remain more profitable as long as their yield exceeds the rate of currency depreciation.
For example, today you can buy U.S. dollars at a bank or exchange office at UAH 44.16 per USD. Alternatively, you can invest in one-year Ukrainian government bonds (OVDPs) through ICU Trade, currently offering a fixed annual yield of 15.55%.
In this scenario, OVDPs will generate a higher return provided that the exchange rate does not increase by more than 15.55% over the next year. In other words, investing in government bonds remains the better option as long as the dollar does not rise above approximately UAH 51 per USD by the time the bonds mature.
The key question every investor should ask is therefore:
Is it realistic for the hryvnia to depreciate by more than 15% within a single year?
Since the beginning of 2026, the hryvnia has indeed weakened by around 4%, a noticeable contrast to the relatively stable exchange rate seen throughout last year. According to the National Bank of Ukraine (NBU), the recent appreciation of the U.S. dollar has been driven primarily by increased geopolitical uncertainty, which has caused turbulence across global financial and commodity markets.
However, following the sharp depreciation observed in early spring, the exchange rate has gradually stabilized and even declined slightly over the past week, largely due to substantial foreign exchange interventions by the NBU.
The central bank has a strong incentive to preserve the attractiveness of hryvnia-denominated assets and maintain stability in the foreign exchange market. Therefore, there are good reasons to expect continued efforts aimed at reducing market volatility and keeping the official exchange rate below UAH 44 per USD.
Does the NBU have sufficient resources to achieve this?
At present, the regulator has stated that it remains comfortable with the current level of foreign exchange interventions and expects significant inflows of international financial assistance in the coming months. Ukraine's international reserves are currently at record-high levels and are expected to remain above USD 50 billion throughout the year.
For now, we maintain our year-end exchange rate forecast of approximately UAH 45 per USD.
Even if our forecast proves too optimistic and the hryvnia depreciates somewhat more than expected, a depreciation exceeding 15% over the next twelve months currently appears unlikely.
