What happened after the attack?

At the beginning of the Russian invasion, a lot of investors panicked. We cannot blame them, as it has been the first war in Europe since the Balkans in the 1990s (assuming Russian aggression against Ukraine in 2014 wasn’t a war). Horrified investors made rushed decisions exaggerated. At first, a lot of analysts believed that the attack was just a quick operation based on terror that would end quickly with some kind of forced agreement. As this scenario remained false the panic continued. That is why investors withdrew from currencies and assets that were vulnerable to war. On the global market, the most visible change was the 4% fall in euro against the dollar. Investors assumed that Europe would pay more for the costs of the sanctions as they would be more impactful there.

Return of the hope

The turning point in the markets came in the middle of the third week of the fights. Massive support for the Ukrainians helped them defend their home country and since the Russian military failed to achieve their goals some enthusiasm returned. We cannot call the situation “normal” while writing this text. But we are much closer to the pre-war price levels than during the first two weeks of the aggression. This is especially true for local currencies of countries close to Ukraine. Those currencies lost the most at the beginning of the war and now they have regained most of their value. The Russian ruble’s story is a bit different as due to the sanctions most of the Russian banks were cut off from the global financial system. That is why Russians managed, thanks to some shady actions, like changing the currency of energy sources settlements to rubles, to manipulate its rate.

What to expect next?

Even if the conflict ends soon (the author hopes peace will return at the time of publication) we have to be aware of future problems. The sanctions will cost us a lot, especially if they were to be imposed on gas and oil. Another problem goes for Ukrainian Hryvnia. Ukraine already suffered major human and material losses. They have to add the emigration of skilled workers. Some of them might not return to the country. It would be even harder for the Ukrainian economy to rebuild after the war without those specialists despite the help from western countries. This might be a serious problem for the Hryvnia rate.

Currency One is one of the largest company on the online currency exchange market in Poland. Maciej Przygórzewski is the COO at the company.