Ukraine Moves Toward Flexible Currency to Improve Economy

Ukraine's central bank said it would allow controlled currency fluctuations starting Tuesday, easing wartime restrictions to boost the economy.

At the beginning of the war Kyiv suspended all currency trading, and set a fixed exchange rate to defend its currency -- the hryvnia -- and stabilise the markets.

"The National Bank of Ukraine is implementing managed exchange rate flexibility, which will strengthen the stability of the foreign exchange market and the economy," the central bank said in Tuesday's statement.

The central bank had been for months signalling it would ease control.

With inflation slowing down and international reserves "sufficiently high for a long time" it said the time was now right to act.

Under a managed flexible rate, a country's central bank intervenes on the markets to maintain the currency around a chosen level.

"The National Bank will significantly limit exchange rate fluctuations" to prevent extreme changes in the level of the hryvnia, the bank said.

It will keep working toward easing restrictions but said its priority was to maintain currency stability.

The hryvnia had been pegged at around 29 to the dollar at the beginning of the war, but it devalued in July 2022 to around 36.