What Is the Hryvnia (Hry), the Currency of Ukraine?

The Hryvnia (Hry), with the ISO 4217 code UAH, is the national currency of Ukraine. It serves as the primary medium of exchange for all transactions within the country. It is subdivided into 100 kopiykas. The National Bank of Ukraine (NBU), the country’s central bank, issues and manages the currency.

Historical Context

The Hryvnia became Ukraine’s national currency through a monetary reform in September 1996. This reform replaced the Ukrainian Karbovanets, which had been the sole legal tender since November 1992 and experienced severe hyperinflation in the early 1990s after the dissolution of the Soviet Union. The introduction of the Hryvnia was a strategic move to stabilize the economy and assert financial independence.

It was formally introduced by decree, with an exchange rate of 1 Hryvnia for every 100,000 Karbovanets. During a two-week transition, both currencies circulated, and bank accounts were automatically converted. Initial Hryvnia banknotes were designed as early as 1992 and printed abroad due to Ukraine’s lack of its own printing facilities.

Denominations and Security Features

The Hryvnia currency system includes both banknotes and coins. Banknotes are issued in denominations of 1, 2, 5, 10, 20, 50, 100, 200, 500, and 1,000 Hryvnias. Each banknote features a historical Ukrainian figure on the obverse and a landmark or cultural site on the reverse.

Coins are available in denominations of 1, 2, 5, 10, 25, and 50 kopiykas, along with 1, 2, 5, and 10 Hryvnia coins. Some lower denomination kopiyka coins, such as 1, 2, and 5 kopiykas, have been demonetized. The NBU has also replaced lower-denomination banknotes with coins.

To safeguard against counterfeiting, Hryvnia banknotes incorporate several advanced security features:

• Watermarks, which reveal a portrait when held to light.
• Security threads embedded within the paper, often displaying microprinted text or dynamic effects.
• Latent images, visible only at certain angles.
• Optical variable ink (SPARK), which changes color and produces a dynamic light effect.
• Microprinting, extremely small text legible only under magnification.
• Raised embossed elements for tactile identification.

These measures make replication challenging and ensure the authenticity of the currency.

Economic Role and Exchange Rate Dynamics

The Hryvnia serves as the sole legal tender in Ukraine, enabling all domestic transactions, including consumer purchases, wages, and inter-business payments. Its stability is a primary objective of the National Bank of Ukraine (NBU), which manages monetary policy to ensure price stability. This stability protects incomes and savings from depreciation and supports long-term investment.

The Hryvnia’s exchange rate against major international currencies, such as the U.S. dollar and Euro, is influenced by several macroeconomic factors. Inflation rates within Ukraine, compared to its trading partners, directly affect its purchasing power and international value. The NBU’s interest rates also play a significant role, as higher rates can attract foreign investment, increasing demand for the Hryvnia.

Ukraine’s balance of payments, reflecting its trade in goods, services, and capital flows, impacts the Hryvnia’s supply and demand in foreign exchange markets. A persistent trade deficit, for example, can lead to depreciation. Geopolitical events also exert substantial influence, often leading to increased volatility and pressure on the exchange rate due to altered investor sentiment and economic uncertainty.

The NBU employs various instruments to manage the exchange rate, shifting between regimes like managed floats and, at times, fixed exchange rates during periods of heightened instability. For instance, in response to significant geopolitical challenges, the NBU has implemented capital controls and foreign exchange restrictions to preserve stability. These measures, while sometimes limiting currency convertibility, aim to stabilize the Hryvnia’s value and curb inflationary pressures, thereby influencing the purchasing power of goods, especially imports, for the average person.