5 Hryven – Ukraine

The currency situation in Ukraine in 2022 was defined by the profound economic shock of the full-scale Russian invasion, which began on February 24. In immediate response, the National Bank of Ukraine (NBU) suspended the foreign exchange market, fixed the official hryvnia (UAH) exchange rate, and imposed strict capital controls to prevent financial panic and a massive outflow of funds. These drastic measures were essential to preserve macroeconomic stability, ensure the continuity of payments and banking operations, and conserve critically important foreign currency reserves to finance essential imports like energy and defense.

Throughout the year, the NBU maintained a managed fixed exchange rate, pegging the hryvnia at 29.25 to the U.S. dollar. This policy, supported by substantial international financial assistance from partners like the IMF, U.S., and EU, was a key anchor for economic expectations amidst extreme uncertainty. While this official rate remained stable, a significant parallel market emerged where the hryvnia traded at a considerable discount, reflecting the war's severe pressures, including a deep GDP contraction, massive government deficit spending on defense, and disrupted exports.

Despite the immense challenges, Ukraine's currency regime proved resilient in 2022, avoiding a collapse in value or hyperinflation. The strict controls, combined with over $31 billion in foreign aid received that year, allowed the NBU to rebuild reserves and ensure critical transactions. However, this stability came at the cost of a heavily constrained and segmented foreign exchange market, with the gap between the official and unofficial rates highlighting the underlying economic strain and the system's reliance on continuous external financing to sustain the war effort and basic state functions.