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The value of the Hryvnia, has hardly been affected by the Russian invasion of Ukraine on 21 february. https://www.google.com/search?channel=fs&client=ubuntu&q=hryvnia+to+euro

I can think of several reasons why Ukrainian currency would have taken a severe blow:

  • 2.8 million refugees (on a population of around 41 Million), many of whom will change Hryvnias for foreign currency
  • the risk that a Russian-imposed government may impose restrictions on the exchange of currency, or doesn't have take appropriate measures to ensure the value of the national currency, or even
  • the risk that a new government introduces a new currency and declares the previous currency invalid

Apparently, traders don't perceive these as serious risks.

What is keeping the exchange rate of Ukrainian currency stable, despite the risks mentioned above?

Or am I over-estimating the risks?

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  • $\begingroup$ I was unable to find it, but I remember reading somewhere that a natural disaster may actually strengthen a country's currency. There were several proposed explanations, such as influx of foreign donations. After the Fukushima nuclear disaster on March 11th, 2011, there was a sudden appreciation of the Yen against the USD. This was reversed by day's end, but a slower appreciation followed for approx. two months. $\endgroup$
    – Giskard
    Mar 16, 2022 at 18:43
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    $\begingroup$ By the way I don’t know how you define currency suffering but the war with Russia started in 2014 and since then Hryvnia lost about 2/3 of its value… That’s a lot $\endgroup$
    – 1muflon1
    Mar 17, 2022 at 6:26
  • $\begingroup$ Thanks 1muflon, I hadn't looked so far back. However, in my recollection, in 2014, Russia didn't try to conquer all of Ukraïne. So if a dispute about a part of the territory already has such an impact on the currency, I would expect an even bigger impact in the current circumstances. Apparently, Ukraine has prepared itself very well this time. $\endgroup$ Mar 18, 2022 at 8:02

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You can read the exact details on the website of the National Bank of Ukraine - download the IMF document.

It has little to do with so called repatriation, as suggested in a comment. In fact, people try to get cash out of the country and convert it into other currencies.

There are foreign exchange controls in place that fixed the FX rate at roughly the level prevailing on Feb 24, and only limited interbank trading is allowed.

Apart from actual trading, cash withdrawals are limited as well.

Trader's do perceive this at serious risk. That said, your desk would usually not celebrate you as a hero if you were to short a country like the Ukraine right now, irrespective of the intervention or not.

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  • $\begingroup$ Thanks AKdemy! I am wondering though: are the foreign exchange controls imposed by Ukraine only, or do they depend on the cooperation of authorities in other countries? $\endgroup$ Mar 18, 2022 at 8:10

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