Switching from the dollar to the euro: What does this mean for Ukrainians?

The Novini.LIVE website spoke with Doctor of Economic Sciences Alexei Plotnikov about why the NBU decided to replace the dollar with the euro and what this means for Ukrainians.

Why the Currency of Reference Needs to Change

This topic was raised by the first deputy head of the National Bank, Ekaterina Rozhkova, during an interview on the "We are Ukraine." channel. She highlighted that a full-scale war is not the best time to transition from the dollar to the euro, but in the long run, the change will take place, considering Ukraine's course towards European integration.

According to Alexei Plotnikov, historically, during periods of easing in the currency market (early 90s), the American dollar became the first currency in Ukraine. Some countries used the German mark and later transitioned to the euro. Logically, if we are moving towards the EU, we should also adopt the European currency.

"How will this happen? Everything will proceed smoothly, in an orderly fashion, when trading on the interbank market starts to occur not in dollars, but in euros. Accordingly, the NBU will set the official exchange rate of the hryvnia against the euro, while the dollar will be calculated as the ratio of the euro-dollar pair.", the expert noted.

He added that the transition will be gradual and certainly not within the next year or two. This is because we must consider the inertia and conservatism of our citizens, who are accustomed to the American currency.

At the same time, MP Bohdan Kitsak clarified during the RanoK.LIVE broadcast that a full replacement will occur in about 5-10 years, not sooner. This will be facilitated by an increase in operations conducted in euros, a boost in exports and imports, remittances from Ukrainians abroad, and so on.

What Will Happen to Dollar and Euro Exchange Rates

The question arises as to how this innovation will affect exchange rate indicators. According to Alexei Plotnikov, the National Bank will set the official hryvnia exchange rate against the euro using the same formula it employs for the dollar, taking into account trading on the interbank market. The assessment will start from current indicators, and the dynamics will depend on external and internal factors.

"For now, we will not predict the euro-dollar dynamics, as this is a matter of the EU economy, decisions made by the new President of the USA, Donald Trump, and similar factors. Currently, there is almost parity (1:1), but there were times when the euro was cheaper than the dollar. It is possible that after Trump's inauguration, the American currency will strengthen. There's no point in predicting the euro's exchange rate in such a long-term perspective," the economist stated.

He added that for ordinary Ukrainians, nothing will change drastically. They will continue to use dollars as they are accustomed to. However, businesses will face changes, expressed the opinion of MP Andriy Nikolenko during the RanoK.LIVE broadcast. After all, export and import operations will take place in euros, which could theoretically lead to an increase in prices for goods and services.

Should Ukrainians Switch to Euros?

There is no necessity to change the currency in which savings are held. It is better to diversify capital and hold cash in different currencies. Alexei Plotnikov recommended that citizens not rely solely on the dollar or euro, as there is always a risk of exchange rate declines.

The basic rule of financial literacy states that the only correct decision is to exchange for different currencies in equal proportions. A portion should be kept in hryvnias for use when needed for purchasing goods or paying for services.

It is worth reminding that during 2025, the dollar exchange rate will rise to the level outlined in the State Budget. It is possible that the figures will exceed the mark of 45 UAH/USD and go higher.

We also reported that the minimum wage remained at 8,000 UAH. However, in dollar terms, it has decreased since the national currency has depreciated. Consequently, the purchasing power of Ukrainians has declined.