PECULIARITIES OF THE FOREIGN EXCHANGE MARKET FUNCTIONING IN UKRAINE IN THE CONTEXT OF ECONOMIC UNCERTAINTY

Abstract

In the era of globalization and the advancement of information technology, Ukraine’s foreign exchange market encounters economic uncertainty, particularly amid efforts to overcome the repercussions of the COVID-19 pandemic and the challenges posed by a full-scale armed invasion by Russia. This situation introduces a range of short-term and long-term obstacles, notably disrupting established trade routes and supply chains, impacting the balance of imports and exports, and placing significant strain on the foreign exchange market among other areas.
This article aims to analyze the current peculiarities of the domestic foreign exchange market’s operation amidst economic uncertainty, focusing on the impact of governmental and regulatory actions on its dynamics, especially throughout 2022-2023. It delves into the regulatory measures enacted to stabilize the foreign exchange market under martial law conditions. The National Bank of Ukraine (NBU) has implemented several countermeasures in response to these challenges, including covering 37% of the currency supply, which resulted in a reduction in daily transactions and an enhanced role in market equilibrium. The measures also include restrictions on capital transactions and the facilitation of international assistance to satisfy foreign exchange demands.
The future outlook of the foreign exchange market is contingent upon economic recuperation, foreign investments, macroeconomic policies, geopolitical risks, and regulatory frameworks. The significance of domestic reforms and international support is underscored as pivotal. It is also noted that global economic tendencies will influence Ukraine’s foreign exchange market in the aftermath of the conflict. This study is aimed at providing insights for professional analysts of the foreign exchange market, governmental bodies, and international financial institutions. Future investigations will explore the implications of the NBU’s policies on the foreign exchange market and their potential to foster economic recovery in Ukraine amidst prevailing challenges and threats.