Ukraine Considering Shift from Dollar to Euro Amid Geopolitical Changes

Ukraine is exploring a move away from the U.S. dollar, linking its currency more closely to the euro amid global trade disruptions and growing ties with Europe, Reuters reported. Central Bank Governor Andriy Pyshnyi stated that potential EU membership, enhanced European defense cooperation, global market instability, and the possibility of fragmented global trade are driving Ukraine’s central bank to reconsider whether the euro should be the reference currency for the hryvnia instead of the dollar. “This work is complex and requires high-quality, multi-faceted preparation,” Pyshnyi added. The dollar dominates international trade and represents the majority of global reserves. Major economies like Saudi Arabia and Hong Kong peg their currencies to the dollar. However, under President Donald Trump, the U.S. unleashed a trade war by imposing higher tariffs, prompting some observers to question the future role of the dollar as a global reserve currency. Now, in the fourth year of conflict against Russian invasion, Ukraine has also seen Trump temporarily halt military aid to the country. European leaders have pledged to strengthen Kyiv’s army to ensure it becomes a cornerstone of future security in Ukraine, but progress remains challenging. Since Trump’s return to the White House, the dollar (.DXY) has fallen over 9% against major currencies as investors withdraw from holding American assets. While transactions involving the U.S. dollar still dominate all segments of the foreign exchange market, according to Pyshnyi, the share of euro transactions is increasing in most areas, albeit ‘moderately so far.’