The Central Bank of Ukraine announced on Thursday the devaluation of the national currency, the hryvnia, by 25% against the dollar due to the impact of the Russian invasion on the national economy.

“Such a measure will strengthen the competitiveness of Ukrainian producers” and “support the stability of the economy under wartime conditions,” the central bank said in a statement.

This established the exchange rate on Thursday at 36.57 hryvnias for one dollar against 29.25 hryvnias for one dollar previously, a rate which was in effect from the start of the Russian invasion at the end of February.

This rate will remain fixed until the new decision of the central bank which preserved most of the restrictions on the foreign exchange market introduced since the beginning of the Russian invasion to prevent a collapse of the national currency.

“The National Bank of Ukraine (NBU) continues to monitor the stability of the exchange rate and takes the necessary measures to balance the situation on the foreign exchange market,” NBU President Kyrylo Shevchenko said in the statement.

“All the restrictions introduced since the beginning of the war are temporary measures” which will allow “the economy to survive the war and contribute to its faster recovery after our victory”, he added.

Ukraine's economy has collapsed since the start of the war and could see its GDP plunge by 45% this year, according to the latest World Bank estimates from June.

In this context of exceptional crisis, Kyiv on Wednesday asked its creditors to agree to agreements allowing the postponement of the payment of interest on its debt.

A group of Western creditors including France, the United States, Germany, Japan and the United Kingdom, agreed to such a postponement, urging other Ukrainian bondholders to do the same.

This measure should save Kyiv five billion dollars over two years, Ukrainian Finance Minister Sergey Marchenko said in a statement on Thursday.