Ukraine has a significant imbalance between exports and imports, how does this affect the dollar exchange rate?

Oleh Hetman, the Economic Expert Platform’s coordinator of expert groups, notes that because the exchange rate is not free-floating but in in a state of controlled flexibility, the national bank will try to adhere to the dollar price set in the state budget — ₴42 per $1. Therefore, it is not excluded that at the end of the year the price of the dollar will be in this range.

“We receive $30-40B in aid yearly, which is more than enough to go to the interbank market and smooth out any fluctuations. So, there won’t be any unexpected jumps,” he said.

The expert added that the regulator understands the current situation and that the country has a large trade imbalance. According to Hetman, the national bank chose a gradual and very mild hryvnia devaluation strategy to restore the balance between exports and imports.

“Our imbalance has reached significant figures — the annual gap is about $30B. That’s why gradual devaluation will help increase exports and reduce imports,” Hetman explained.