In February 203, many of our citizens tried to transfer their funds into cash due to fears of a power outage at banks, which could lead to a loss of access to their own money. However, closer to the summer, the situation relatively stabilized and panic gradually subsided, although it did not disappear completely.
Today, many Ukrainians are faced with the question: how best to store currency to make it as safe as possible? What to do with dollars and euros in the current economic realities?
A considered decision: in which currency is it better to keep money?
Before going to an exchange office and buying foreign banknotes, it is worth weighing all the disadvantages and positive aspects:
- Stability. The main criterion when choosing an asset. Experienced investors always take into account how a currency has performed in the past and what painful crises it has experienced during times of strong shocks.
- Liquidity. A financial resource must be flexible and easily exchangeable in most developed countries.
- The impact of inflation. The main risk for investing is depreciation. In our country, this is a critical problem, since money loses value within one or several months. Therefore, it is worth giving preference to financial assets that, at a minimum, will retain value.
- Political stability of the country. Nowadays, this is a rather important aspect, since the risks of military conflicts that drag the economy into recession have sharply increased in the world. Political instability can significantly affect the value of the currency, so it is better to choose the denominations of those countries and blocs that do not go into the zone of negative volatility.
Considering all these aspects, you can make a more informed decision about whether to use the dollar or the euro to preserve your savings.
Advantages of keeping money in dollars
Many people choose the dollar as a means of saving money because of its traditionally low inflation rate.
However, citizens whose main expenses are tied to the national currency risk being forced to sell dollars at an unfavorable rate if they need money due to high exchange rate volatility.
Foreign currency deposits typically yield income that is below the inflation rate due to the low interest rates of the US Federal Reserve.
Advantages:
- This is the most popular currency in the world, used in almost all countries.
- If you look at its history, the dollar has had an upward trend for decades.
- In the event of economic instability, the dollar allows you to preserve savings without a significant loss of purchasing power.
Despite lower interest rates on foreign currency deposits compared to deposits in the national currency, the return on such savings in the long term often turns out to be more profitable.
In addition, dollar savings are rarely used for everyday needs, which helps to avoid spontaneous expenses. Despite the lower interest rates on foreign currency deposits compared to deposits in the national currency, the return on such savings in the long term often turns out to be more profitable.
Disadvantages:
However, storing dollars also has its risks. The main problem is the fact that money stored in cash does not work, that is, it does not bring any income. In this case, dollars serve exclusively as a financial reserve, which may not be relevant for everyone.
Another important point is that the dollar is often counterfeited. It remains one of the most counterfeited denominations in the world, which creates the risk of receiving low-quality bills or even counterfeits.
Buying and exchanging dollars always involves some financial losses due to exchange rate differences and bank fees. Therefore, it is important to consider these factors before making a decision to invest or create reserves in dollars.
Advantages of keeping money in euros
The main advantage of keeping savings in euros is the high exchange rate against the hryvnia and the dollar, according to Artem Shcherbyna, Investment Director of Capital Times. In his commentary for RBC-Ukraine, he drew attention to the similarity of the situation that developed before Donald Trump's first inauguration in 2017, when it came to economic forecasts.
“In my opinion, the situation is similar to that in 2017 before the start of Trump’s term. Then many argued that the euro was weakening, and the dollar would become incredibly strong after Trump took office. However, in the first year of his presidency, Trump openly stated that he did not support a strong dollar. And, in the end, the dollar during this period showed the worst dynamics in the last 20 years. All currencies, except the dollar, are growing,” Shcherbina notes.
The expert also notes that Trump seems to be unhappy with the high interest rate in the US compared to the EU. If the US Federal Reserve decides to lower it, this will lead to a drop in the yield on dollar assets and, accordingly, a weakening of the dollar itself.
According to Shcherbina's forecasts, the euro may reach the psychological mark of 50 hryvnias by the end of 2025. As for the dollar, its average exchange rate, according to his estimates, in 2025 will not exceed 44 hryvnias, although by the end of the year the hryvnia may weaken further, reaching 46 per US dollar. Such forecasts are based on the assumption that the conflict may continue throughout the year.
Risks of keeping money in one currency
One option for preserving finances is to transfer them to foreign currency. This decision is due to the fact that over the past two decades, national funds in certain countries have significantly devalued. To avoid significant losses, it is worth choosing more stable and reliable assets.
However, there are certain risks associated with holding funds in foreign currency:
- There is a possible risk of devaluation of the selected currency, i.e. its further decline in exchange rate;
- A decrease in the purchasing power of currency, which may occur due to an increase in prices for goods and services;
- The possibility of canceling individual denominations of banknotes, as happened in 2013, when the European Central Bank announced the possibility of withdrawing the 500 euro note from circulation;
- The risk of losses during the conversion of funds when opening a multi-currency deposit, when savings are transferred from one currency to another.
The purchasing power of monetary savings may decline if the rate of increase in consumer prices exceeds the rate of increase in the foreign exchange rate. Conversely, if prices grow more slowly than the rate, the purchasing power of savings increases.
Tips for diversifying your savings
The principle of asset diversification is a classic approach to preserving and growing financial savings. Investors try to reduce risks by distributing funds between different instruments. This strategy serves as protection against possible weakening of the national currency.
If the entire portfolio is held in one currency, for example, in hryvnia, and the exchange rate of this currency falls, this leads to losses in the amount of the corresponding decrease in the exchange rate. If, say, two-thirds of the savings are held in hryvnia and one-third in foreign currency, the fall in the hryvnia is partially offset by the growth of the foreign currency. And when the hryvnia and the foreign currency are represented in equal proportions (50/50), then changes in the exchange rate may not even have a significant impact on the overall state of the portfolio, since the increase in value will balance the weakening of the hryvnia.
When it comes to currency diversification alternatives, even the most reliable currencies have their own peculiarities. Foreign currency assets abroad can be risky, especially if you are not a permanent resident of another country.
As an alternative to the dollar, the Chinese yuan is gaining popularity among investors. The currency is stable, and its exchange rate to the hryvnia is similar to the dollar. You can use a bank or an exchange to purchase yuan. Savings accounts or deposits in yuan are also available.
Another interesting alternative could be the United Arab Emirates dirham. Since 2023, Privatbank has started exchanging cash and opening deposits in dirhams. This currency is stable and its exchange rate fluctuations rarely exceed 0.5%.
Recommendations for choosing a currency
In 2025, currency rates in Ukraine will depend on many factors, including the political situation and possible peace negotiations. What exactly will happen to the hryvnia and in which currency to keep money, explained financial analyst Andriy Shevchyshyn.
What is better to store: dollars or euros?
After the dollar exchange rate exceeded 42 hryvnias, and the euro costs more than 43 hryvnias, the question of which currency to invest in becomes relevant for many Ukrainians. Shevchyshyn recalled that in the first half of 2025, investments in the US dollar look most attractive. This is due to the fact that the euro is under additional pressure during this period.
When will the euro start to recover its position?
The analyst believes that the exchange rate situation will change significantly in the second half of the year. If the conflict in Ukraine becomes less active at some point and peace talks begin, the euro will begin to recover against the dollar. This could happen if the war gradually subsides and European countries experience an economic recovery.
Hryvnia exchange rate dynamics
Until mid-2025, the hryvnia will likely remain weak, and its exchange rate against the dollar may vary within the range of 43-44 hryvnias. However, in the second half of the year, under the conditions of a stable harvest and development of the agricultural sector, its strengthening is possible. According to analysts' forecasts, in the summer the dollar exchange rate may consolidate at the level of 45 hryvnias per dollar.
Long-term forecast
If the military conflict drags on, which is also possible, the euro exchange rate could be negatively affected. And if the situation does not stabilize, the dollar is likely to remain more stable and even exceed the euro by the end of 2025.
General trend of currency forecasts
Economists agree that the dollar exchange rate in Ukraine in 2025 will not be prone to sharp fluctuations. Various financial institutions and independent analysts predict that the hryvnia will remain within the range of 42-45 UAH per dollar and there will be no significant changes in this range.
Thus, investors who plan to keep their savings in foreign currency should closely monitor the economic situation in Ukraine and global events. In the first half of the year, experts recommend buying the dollar, and in the second half, consider the prospects for the euro, depending on the results of peace negotiations.
