The share of currency exchange transactions involving the US dollar ($) decreased last year to 74.1% from 78.7% in 2023, while the shares for the euro (EUR), Polish zloty (PLN), and British pound (£) increased, according to an analysis by the currency exchange market operator "KIT Group," based on data from 100 branches in 30 major cities in Ukraine.
"Despite everything, the US dollar remains the dominant currency in transactions, but its share has diminished, which may indicate a strengthening role of the euro and other currencies in the foreign exchange market," - commented the analysts from "KIT Group" in their currency review.
In contrast, the share of transactions involving the euro rose from 20.8% in 2023 to 25.15% in 2024. Analysts believe this trend may be a result of significant emigration of economically active Ukrainians to eurozone countries, increased foreign trade with EU countries, changes in business payment preferences, or diversification of household savings.
According to the provided data, the number of transactions with the Polish zloty increased by more than one and a half times last year: to 0.56% from 0.36% in 2023, which experts from "KIT" attribute to the activity of labor migrants, deepening business ties between countries, and consequently, an increase in financial flows between Ukraine and Poland.
The share of currency exchange transactions involving the British pound nearly doubled in 2024: rising to 0.15% from 0.08% in 2023. Analysts believe that such a "jump" in the indicator, despite the low overall share in cash transactions, may indicate expanding economic ties between Ukraine and the UK, an increase in cross-border transactions, and strong confidence in British financial instruments.
"The decrease in the dollar's share of currency transactions does not imply a loss of its status as a key reserve currency in Ukraine. The high liquidity of the dollar, its stability, and global status continue to make it the primary tool for capital preservation," - note the analysts from "KIT," who suggest that current changes may be a result of attempts by businesses and households to diversify their currency assets.
"This is especially relevant in light of changes in the monetary policy of the US and the European Central Bank. If the ECB continues its easing policy, the exchange rate of the hryvnia to the euro may be more stable than to the dollar," - they point out.
In this context, experts also reminded about the National Bank of Ukraine's (NBU) announcement regarding a potential change in the official exchange rate of the hryvnia to be pegged to the euro instead of the dollar, as part of the aspiration to join the eurozone in the future.
"The financial behavior and currency preferences of Ukrainians are changing in accordance with external economic conditions. If this trend continues, the euro may continue to increase its share in the cash market, while the zloty will remain an important currency for private and business transactions," - concluded the analysts.