An increase in the hryvnia exchange rate will affect price growth in Ukraine. The National Bank gave a forecast

The National Bank stated that the correction of the official exchange rate of the hryvnia by 25% (to 36.6 hryvnias) will lead to an increase in prices in Ukraine by 2-3%. Part of the increase will be due to fuel (0.6-0.8 percentage points of the general level of inflation).

Deputy Chairman of the regulator, Serhiy Nikolaichuk, told about this during a briefing at the National Bank.

The NBU believes that the increase in the official exchange rate will have a rather moderate effect on the dynamics of inflation. A higher official exchange rate will mean that importers will buy the currency at a higher price, and therefore embed it in the final prices of goods. However, the transfer from the official exchange rate will not be complete, Nikolaichuk said, as it will be partly offset by the reduction of importersʼ margins, and partly exchange rate expectations have already been included in the prices.

Nikolaichuk added that the increase in the dollar exchange rate is already included in the NBUʼs new forecast for inflation growth to 31% in 2022.

• On July 21, the National Bank of Ukraine adjusted the official exchange rate of the hryvnia to the US dollar by 25% to UAH 36.56/US dollar. The regulator explained that this will make it possible to increase the competitiveness of Ukrainian manufacturers, bring exchange rates closer to different groups of businesses and the population, and support the stability of the economy in wartime conditions.
• At the beginning of the war, the National Bank of Ukraine fixed the hryvnia exchange rate at 29.25 UAH for 1 US dollar.