Ukraine Considers Euro Link for Hryvnia as Dollar's Role Faces Renewed Scrutiny

Economic

Summary:

As geopolitical tensions and economic realignments deepen, Ukraine is weighing a shift from using the U.S. dollar as the reference currency for the hryvnia to the euro...

Kyiv Reassesses Currency Policy Amid Global Shifts

Ukraine’s central bank is formally exploring a potential shift in its currency anchor from the U.S. dollar to the euro, marking a significant turning point in the country’s financial alignment. Governor Andriy Pyshnyi cited multiple factors motivating the reassessment, including Ukraine’s path toward EU accession, the increased role of Europe in Kyiv’s defense, and growing concerns over global trade fragmentation and volatility.

While the hryvnia has historically used the U.S. dollar as its reference point since its introduction in 1996, Pyshnyi acknowledged that current geopolitical and economic conditions necessitate a thorough evaluation. Though no immediate decision has been made, his statement is the clearest signal yet of a potential currency policy shift in the post-war reconstruction era.

Dollar Dominance in Question Amid Tariffs and Strategic Drift

The U.S. dollar remains the dominant reserve currency and continues to underpin global trade. However, recent developments under President Trump—particularly the imposition of some of the highest tariffs in a century—have cast doubt on the future of the dollar’s uncontested role. With the dollar index down over 9% since Trump’s return to office, investors are beginning to recalibrate their exposure to U.S. assets, especially in light of heightened political risk and reduced predictability in foreign policy.

Ukraine, like several other countries, is navigating this transition cautiously. While dollar-denominated transactions still dominate in Ukraine’s foreign exchange market, Pyshnyi noted that euro-based transactions are gradually increasing, even if only moderately for now.

Path to EU Membership Accelerates Currency Rethinking

The momentum for Ukraine’s potential EU accession is reinforcing the logic of currency realignment. With membership talks launched in 2023 and a tentative 2030 timeline for entry, Kyiv is already adjusting policies to align more closely with European norms. Moldova, which is on a parallel accession track, officially shifted its currency reference from the dollar to the euro at the start of 2025—offering a model Ukraine could follow.

In recent years, Ukraine has transitioned from a fixed USD peg to a managed exchange rate regime, still referencing the dollar for FX operations. This arrangement was adopted during the early phase of the Russian invasion, which triggered capital controls and forced a sharp devaluation. As fiscal balances stabilize and market conditions improve, a shift toward euro anchoring is becoming more technically feasible.

Economic Outlook Hinges on War Resolution and Investment Revival

Looking ahead, Ukraine forecasts GDP growth of 3.7–3.9% over the next two years, supported by stronger investment and consumer demand tied to European integration. However, Governor Pyshnyi emphasized that a swift end to the war—particularly one with lasting security guarantees—is the clearest path to sustainable growth. He also cautioned that the economic dividends of peace would take time to fully materialize, even under optimal conditions.

In the near term, Ukraine remains heavily dependent on external financing. The central bank expects $55 billion in support for 2025, covering not only the wartime budget deficit but also building reserves for the coming years. Projections indicate that aid will decline to $17 billion in 2026 and $15 billion in 2027, making forward-looking fiscal planning essential.

Ukraine’s consideration of a euro-linked currency regime marks more than a technical adjustment—it reflects the broader strategic reorientation of the country toward Europe and away from reliance on a U.S.-centric global financial system increasingly shaped by political and trade volatility. While the dollar’s dominance is unlikely to disappear overnight, the trajectory suggests a gradual diversification of global financial architecture, particularly among nations at the frontlines of geopolitical disruption.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Gerik

Economic

Geoeconomic Realignment Echoes Historical Tensions

In a rapidly transforming geopolitical environment, the future of globalization is being redefined. Protectionist impulses—most prominently embodied in President Donald Trump’s aggressive tariff campaign—are challenging decades of economic interdependence. According to Alexander Yakovenko, former Russian ambassador to the UK, today’s strategic recalibrations mirror those that preceded major global conflicts in the 20th century.

Drawing from history, Yakovenko compares current U.S.-China tensions to the rivalry between rising and established powers before World War I. Just as the ascent of Germany, the U.S., and Russia once threatened Britain's dominance, today’s global order is being shaken by the growing influence of China, India, and a resurgent Russia. These dynamics suggest a cyclical rebalancing of power, now occurring through economic coercion rather than direct military confrontation.

The Endangered Foundations of Global Economic Integration

The interconnected global economy—long seen as a stabilizing force—is under siege. Trump’s tariff escalation and the broader resurgence of economic nationalism are reversing the trajectory of liberal trade policy. April 2025’s so-called “Liberation Day” tariffs, which include sweeping duties on all U.S. imports and up to 145% on Chinese goods, marked a watershed moment. The resulting retaliatory measures, capital flight, and corporate hesitation have signaled to many that the age of frictionless globalization may be ending.

Yakovenko highlights the risks of such shifts, pointing out that strategic miscalculations in the early 20th century led to catastrophic wars. Today’s multipolar competition—fueled by trade disputes, sanctions, and technological decoupling—raises the risk of systemic fragmentation without adequate global governance structures to contain it.

China, India, and Russia Challenge Western Dominance

While the U.S. leads efforts to restrain its competitors, countries such as China and Russia have adapted. Russia, in particular, has demonstrated resilience in military and economic terms, reasserting its influence in Eurasia and redefining modern warfare standards. China, meanwhile, is set to match U.S. military capacity, including nuclear deterrence, by 2030. India, positioned as a potential counterweight to China, is becoming a focal point of U.S. strategic outreach.

However, these moves reveal the limits of containment strategies. Deep trade, investment, and supply chain ties between China and the West make economic decoupling both costly and complex. European allies, heavily invested in global markets, may ultimately resist full alignment with U.S. protectionism if it threatens their own economic interests.

Protectionism's Economic Price: Growth Slowdown and Capital Retrenchment

Recent projections from the International Monetary Fund (IMF) anticipate a slowdown in global growth from 3.3% to 2.8% in 2025, driven in part by tariff-induced disruptions. The U.S. is expected to see its GDP growth fall from 2.8% to 1.8%, while China's growth may decline from 5.0% to 4.0%. Export losses between the two powers could be severe, with Chinese exports to the U.S. projected to drop as much as 27.6% in the medium term.

These outcomes are not merely cyclical—they reflect structural shifts in global trade dynamics. A report from BlackRock emphasizes that economic security, artificial intelligence development, and infrastructure modernization will define the next chapter of globalization. Tariffs, once viewed as short-term levers of leverage, are now embedded into national industrial strategies, despite their long-term drag on capital formation and productivity.

Toward a Managed Transition or Economic Fragmentation?

For Washington, the challenge lies in crafting a coherent, long-term strategy that reconciles economic nationalism with domestic competitiveness. Yakovenko suggests a 21st-century analogue to Roosevelt’s New Deal—one that addresses national debt, fiscal balance, and industrial renewal—may be necessary. Yet, such a shift carries its own risks, including currency shocks, Fed instability, and pressure on the U.S. dollar.

As global coordination weakens, multilateral institutions are increasingly sidelined, and countries adopt transactional economic policies. The resulting environment may see increased inflation volatility, diminished capital efficiency, and greater vulnerability to external shocks.

Globalization at a Crossroads

The world stands at a pivotal moment. The foundations of globalization are being re-examined through the lens of national interest, military deterrence, and geoeconomic strategy. While full-scale deglobalization remains unlikely, a new form of globalization—more fragmented, security-conscious, and regionally oriented—is taking shape.

The path forward may depend not only on how power is distributed, but how cooperation is reimagined. Without strategic foresight and institutional renewal, the global economy risks entering an era of prolonged uncertainty, where protectionism is no longer the exception but the norm.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Central Banks Enter Wait-and-See Mode After Early-Year Cuts

After an aggressive start to the year, the momentum for interest rate cuts across major central banks has slowed considerably by April. Among the five central banks overseeing the ten most-traded currencies that held policy meetings last month, only the European Central Bank (ECB) and the Reserve Bank of New Zealand (RBNZ) opted to lower rates, each trimming by 25 basis points. Meanwhile, the central banks of Australia, Japan, and Canada maintained their existing rates, signaling a pause in further easing.

This shift reflects a broader recalibration of global monetary strategy. In February, half of the G10 central banks had moved to reduce rates. Yet by April, concerns over inflation stickiness and external volatility—particularly from U.S. trade policy—have pushed many institutions into a more defensive stance. According to Reuters' calculations, the G10 has enacted 12 rate cuts totaling 3.25 percentage points this year, offset by just one hike from the Bank of Japan (+0.25%), illustrating a net easing trend that is now decelerating.

Emerging Markets Exercise Caution Despite Economic Pressures

In the emerging market sphere, a similar trend has emerged: caution is taking precedence. Among the 18 developing economy central banks surveyed by Reuters, only four out of 13 that met in April enacted rate cuts—India, Thailand, the Philippines, and Colombia, each by 25 basis points. The remainder held rates steady, opting to monitor capital flows and inflationary signals before committing to further action.

Even countries facing declining inflation and weaker growth prospects, such as South Korea and Indonesia, resisted the temptation to cut rates. Analysts attribute this hesitance to the sharp volatility in the U.S. dollar, heightened geopolitical risk, and an unpredictable trade policy environment under the Trump administration. As TS Lombard's Jon Harrison explains, the fear of triggering capital flight has made emerging market policymakers wary, particularly as global investors remain sensitive to interest rate differentials and political instability.

Localized Tightening Emerges in Volatile Economies

While global sentiment leans toward caution, specific countries have adopted aggressive tightening measures in response to acute domestic threats. Turkey, for example, surprised markets by raising its policy rate by 3.5 percentage points in a single move to arrest capital outflows amid rising political uncertainty. Brazil, facing persistent inflation pressures, has raised rates twice in 2025, contributing to a total of 5.5 percentage points in cumulative tightening across emerging markets so far this year.

These episodes of rate hikes highlight a growing divergence in policy response: while many central banks pause to reassess, others are being forced to act decisively in response to localized vulnerabilities. This divergence reflects a broader theme for 2025—monetary policy is increasingly driven by idiosyncratic national factors rather than coordinated global cycles.

Markets Shift Focus to the Fed’s Strategic Direction

Attention now turns to the U.S. Federal Reserve, which concluded its May policy meeting by holding rates steady at 4.25%–4.50%. As the world’s most influential central bank, the Fed’s direction serves as an anchor for global policy decisions. However, the institution now faces its own credibility challenges. With the U.S. economy at risk of slowing under the weight of sweeping tariffs and inflation showing signs of persistence, the Fed is caught in a delicate balancing act.

Jean Boivin of BlackRock noted that the Fed is dealing with a classic dilemma: growth is softening, but inflation remains elevated. In such a scenario, preemptive rate cuts could undermine inflation control efforts, while continued tightening risks derailing the fragile recovery. This indecision at the Fed adds to global uncertainty and may reinforce the cautious stance being adopted by other central banks.

The Easing Cycle Slows, Policy Divergence Deepens

What began as a synchronized global easing cycle is now evolving into a fragmented landscape. Central banks are increasingly cautious, responding to a complex mix of inflation dynamics, political risk, and volatile capital flows. While headline figures still reflect a net easing bias—8.5 percentage points of cumulative rate cuts in emerging markets this year—this momentum has slowed, and isolated rate hikes are beginning to reappear.

As global monetary policy decouples, future direction will hinge on three key variables: clarity in U.S. fiscal and trade policy, the trajectory of inflation in major economies, and the resilience of capital inflows into emerging markets. Until these uncertainties resolve, global central banks are likely to favor flexibility over forward guidance.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Trade Shock Halts Global Deal-Making Momentum

Following President Donald Trump’s April 2 declaration of widespread import tariffs—dubbed “Liberation Day”—the global M&A market effectively stalled. According to Dealogic data, only 2,330 transactions were announced worldwide in April, the lowest since February 2005 and 34% below the historical monthly average. In terms of value, global M&A totaled just $243 billion, a 54% drop from March and 20% below the 20-year monthly average.

In the United States, the world’s largest M&A market, only 555 deals were recorded in April—the fewest in any month since the 2008–2009 financial crisis. The scale of this decline surpasses even the early-pandemic lows, underscoring how deeply the current policy environment has disrupted corporate planning and investor confidence.

Tariff Uncertainty Derails Strategic Transactions

Trump’s tariff announcement, which included a minimum 10% duty on all imports and levies up to 145% on Chinese goods, shocked corporate boardrooms and led to immediate reactions across sectors. Several high-profile companies, including Chime and StubHub, postponed or canceled IPOs amid growing policy volatility. Investment banks, which earn fees from brokering M&A and public offerings, have shifted from pitching deals to advising clients to wait for policy clarity.

"Executives are still struggling to understand how the tariffs will affect their cost structures and cross-border operations," said Lorenzo Paoletti of Truist Securities. “It’s safer to keep cash on hand than to take strategic leaps in this environment.”

This climate has prompted a significant repricing of risk. Kristin Pothier of KPMG noted that a “chain reaction” is unfolding across the M&A landscape, with deals delayed not only by regulatory concerns but also by shifting revenue forecasts and valuation difficulties triggered by cost shocks.

Tech Sector Offers Relative Resilience Amid Broad Slowdown

Despite the downturn, technology-related deals provided a relative bright spot. These transactions, which often focus on intellectual property rather than physical goods, are less exposed to tariff impacts. In April, tech accounted for nearly 40% of the $600 billion in U.S. deal volume so far in 2025, underscoring investor preference for assets shielded from supply chain disruptions and import duties.

Notably, Global Payments’ $24.25 billion acquisition of a payment services firm and Boeing’s $10.6 billion sale of its Jeppesen flight software unit to Thoma Bravo helped support headline deal value, though they were insufficient to reverse the broader contraction in deal flow.

Sectoral Sensitivity and Divergent Risk Exposure

The impact of the tariffs has not been evenly distributed across industries. Telecommunications, media, energy, and utilities—sectors with lower exposure to international trade—have weathered the policy shock relatively well. In contrast, industrials, healthcare, and segments of technology are reassessing supply chains, pricing models, and global expansion strategies.

Kevin Cox of Citi emphasized that any manufacturer relying on cross-border inputs or exports is vulnerable. His team is urging clients to reevaluate the risk profiles and expected returns of acquisition targets under new trade assumptions. “Buyers are either pricing in these risks or pausing to wait for clearer conditions,” he explained.

M&A Enters a Period of Strategic Paralysis

April 2025 marked a profound shift in global deal-making behavior, with M&A volume and value plunging under the weight of geopolitical unpredictability. Trump's aggressive tariff strategy, combined with legal threats to the Federal Reserve’s independence and ambiguous trade signals from the White House, has shaken the confidence required for long-term investment decisions.

While some strategic deals—particularly in tech—continue to move forward, the broader M&A environment has entered a holding phase. Until there is stabilization in trade policy and greater predictability in economic conditions, both buyers and sellers are expected to remain on the sidelines, prioritizing capital preservation and strategic flexibility.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

FastBull Featured

Daily News

[Quick Facts]

1. Trump administration proposes lifting Biden-era AI chip restrictions

2. EU: New countermeasures against U.S. will be announced on the 8th if tariff talks are fruitless

3. The U.S. prioritizes long-term peace in Ukraine over short-term ceasefire

4. Central Bank of Brazil raises rates by 50BP to nearly 20-year high, remaining open to next move

5. India offers zero-for-zero on select goods in India-U.S. tariff talks

6. Fed holds rates steady

[News Details]

Trump administration proposes lifting Biden-era AI chip restrictions

Sources indicate that the Trump administration is considering rescinding the AI chip restrictions implemented during the Biden administration. This action is part of a broader initiative to revise semiconductor trade regulations, which have faced significant opposition from major tech companies and international entities. The current policy categorizes nations into three tiers to govern chip exports from companies like Nvidia (NVDA.O). According to sources, the Trump administration will not enforce the AI diffusion rule, effective May 15, although the decision to repeal it is not finalized. A U.S. Department of Commerce spokesperson stated, "The Biden administration's AI rules are overly complex and bureaucratic, hindering American innovation. We will replace them with a significantly simpler rule that will unleash American innovation and ensure U.S. leadership in the AI sector." During the development of the new regulations, the Department of Commerce will maintain strict enforcement of chip export controls, sources indicate.

EU: New countermeasures against U.S. will be announced on the 8th if tariff talks are fruitless

European Commission Vice-President Maroš Šefčovič, responsible for Trade and Economic Security, stated on the 7th that the European Union will unveil details of its next phase of retaliatory tariffs against the U.S. on the 8th if negotiations on tariffs fail to yield an agreement. Šefčovič indicated that negotiations remain the preferred option, but the EU will not compromise at any cost, and the EU will not "put all its eggs in one basket."

The U.S. prioritizes long-term peace in Ukraine over short-term ceasefire

Vice President Vance stated that the U.S. is shifting its focus from a 30-day ceasefire in the Russia-Ukraine conflict to the development of a sustainable, long-term peace solution. "We are working to move beyond the fixation on a 30-day ceasefire and concentrate on the specific parameters of a long-term solution, and we are actively pursuing this process," Vance remarked at the Munich Leaders Meeting in Washington.

Central Bank of Brazil raises rates by 50BP to nearly 20-year high, remaining open to next move

The Central Bank of Brazil increased its benchmark interest rate by 50 basis points to 14.75% on Wednesday, marking the sixth consecutive rate hike. This action elevated borrowing costs to levels not seen in nearly two decades. Amidst global economic uncertainty and persistent domestic inflationary pressures, the Central Bank maintains a flexible stance on future monetary policy adjustments. Policymakers emphasized that the current economic climate necessitates a "prolonged period of significantly restrictive monetary policy" to achieve inflation targets. The official statement from the Central Bank indicated a more cautious approach to future monetary policy decisions, citing increased uncertainty and the need to assess the cumulative impact of the current monetary policy cycle. The statement further noted that future decisions would be data-dependent, considering evolving inflation forecasts. Flavio Serrano, Chief Economist at Banco BMG, suggested that the Central Bank's communication implies a potential for a smaller rate increase in June, though he views this as unlikely. "My base case scenario is a hold in June, maintaining the rate at 14.75%. There may be room for rate cuts by the end of the year, contingent on how the economic outlook evolves," Serrano stated.

India offers zero-for-zero on select goods in India-U.S. tariff talks

Sources indicate that during trade negotiations with the U.S., India proposed a "zero-for-zero" tariff arrangement targeting specific commodities, including steel, auto parts, and pharmaceuticals. This proposal, however, is contingent upon reciprocity and limited to a defined volume of imports. Concerns have been raised by Washington regarding India's quality control mandates, which are perceived as non-tariff barriers to trade for its exports.

Fed holds rates steady

On May 7, local time, the Federal Open Market Committee (FOMC) unanimously decided to hold the target range for the federal funds rate steady at 4.25%-4.50%, marking the third consecutive meeting with no policy change. The statement indicated that risks to inflation and unemployment have increased, further clouding the economic outlook. Unlike the previous two statements this year, the Federal Reserve made mention of trade. Despite the impact of fluctuating net exports on data, recent indicators suggest that economic activity continues to expand at a solid pace. The unemployment rate has remained stable at a low level in recent months, and labor market conditions remain robust, while inflation remains elevated.

The Federal Reserve remains focused on achieving its dual mandate of maximum employment and price stability. Despite uncertainties, the U.S. economy is fundamentally sound, with low unemployment and a labor market near full employment. Recent inflation has fallen significantly but remains slightly above the 2% long-term target. Changes in trade policy, particularly tariffs, pose potential risks of slower economic growth, increased inflation, and rising unemployment. The Federal Reserve will closely monitor data and changing conditions to ensure long-term inflation expectations remain stable and will adjust policy as necessary. Currently, the Federal Reserve maintains a wait-and-see approach, awaiting clearer economic signals.

During the recent press conference, Powell reiterated the prevailing economic uncertainty, emphasizing the Federal Reserve's need for a patient, wait-and-see approach. Amidst the divergence between soft and hard data, he expressed a preference for the latter, highlighting the continued robustness of the U.S. economy as reflected in current hard data. This stance, while slightly hawkish, is justifiable given the circumstances: the Q1 GDP contraction is largely attributable to disruptions from the Trump administration's tariff policies, which led to a surge in short-term inventory accumulation, thereby distorting growth figures.

We appear to be entering a new phase, with the government initiating negotiations with key trading partners, potentially leading to significant shifts. The resolution of these issues will be of paramount importance.

[Today's Focus]

UTC+8 14:00 German March Industrial Output MoM

UTC+8 19:00 Bank of England May Interest Rate Decision

UTC+8 22:00 U.S. March Wholesale Sales MoM

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Fed Caught Between Conflicting Signals and Political Headwinds

At its latest policy meeting, the Federal Reserve opted to hold interest rates steady while issuing one of its most cautious statements in recent memory. Chair Jerome Powell emphasized that while the U.S. economy remains resilient on the surface—with continued job gains and solid GDP figures—deepening uncertainty, particularly surrounding trade policy, is clouding the outlook and making the appropriate monetary response less clear.

The central bank’s policy stance remains officially data-dependent. However, Powell’s language during the press conference revealed the limits of that approach when market signals are being distorted by rapid and unpredictable policy shifts from the White House. Trump’s “Liberation Day” tariff measures, subsequent exemptions, and delayed implementations have created a fluid environment that complicates economic forecasting and decision-making.

Tariff Volatility Clouds Economic Outlook

A core challenge now facing the Fed is how to interpret data that has been skewed by anticipatory behavior. For example, the Q1 GDP slowdown appeared more severe due to a front-loading of imports as businesses sought to avoid pending tariffs. Powell noted that domestic demand remains firm, but acknowledged that consumer and business confidence has become fragile, with anecdotal evidence from the Fed’s Beige Book reporting paused investment decisions, rising costs, and waning orders.

With inflation pressures building and unemployment potentially rising—two opposing forces within the Fed’s dual mandate—the institution finds itself in a strategic holding pattern. Powell underscored that the Fed is “well-positioned to respond in a timely way,” but refrained from signaling any definitive path forward until data better reveals which direction the economy is headed.

Markets React Calmly to Wait-and-See Stance

Despite the cautious tone, markets responded positively to the Fed’s noncommittal position. The Dow Jones rose 0.7% to 41,113.97, the S&P 500 gained 0.4% to 5,631.28, and the Nasdaq climbed 0.3% to 17,738.16. Treasury yields fell modestly, reflecting a decline in near-term rate hike expectations, while the dollar rebounded slightly against a basket of global currencies.

The market's muted reaction reflects an understanding that while risks are growing, the Fed remains a source of relative stability. Ashish Shah of Goldman Sachs Asset Management noted that recent strong labor market data supports the Fed’s current stance, but cautioned that a deterioration in employment would be the key trigger for renewed easing.

Outlook Hinges on Trade and Policy Clarity

The Fed’s reluctance to act prematurely is rooted in its legal and institutional mandate: it cannot respond to speculative threats, only realized ones. Yet the scale and unpredictability of President Trump’s trade strategy, including threats of retaliatory tariffs, abrupt changes in trade timelines, and the absence of a clear long-term framework, are making it difficult to distinguish between temporary volatility and structural shifts.

Economist Thomas Simons from Jefferies noted that the Fed’s statement likely underplays how destabilizing recent developments have been. He argued that Powell’s “noncommittal” tone is appropriate given that any firm projection could be rendered obsolete by a single tweet or executive order.

Meanwhile, when the Fed last published its economic projections in March, it anticipated two 25 basis point cuts by year-end. As of early May, that scenario appears increasingly remote unless a sharp downturn emerges.

Fed Stands Ready but Stays Cautious Amid External Chaos

As of now, the Fed is effectively sidelined by the political economy. While domestic fundamentals such as employment and consumption have remained stable, the external policy environment—particularly tariff escalation and legal-political unpredictability—has frozen the central bank’s ability to act decisively. The path forward depends not just on inflation or job data, but also on whether a coherent policy direction emerges from the executive branch.

Unless the trade and political fog lifts, the Fed is likely to remain in “wait-and-react” mode, using flexibility rather than forward guidance as its main tool. This may calm markets for now, but the underlying tension between political disruption and economic stewardship continues to grow.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Grace Montgomery

Russia-Ukraine Conflict

A three-day ceasefire declared by Russia came into effect on Thursday morning with skies over Ukraine's major cities quiet, in a change from successive nights of heavy attacks by Russian drones and ballistic missiles.

Ukraine's air force reported that after the start of the Kremlin-sponsored ceasefire Russian aircraft twice launched guided bombs on the Sumy region of northern Ukraine. There was no word on damage and Reuters could not independently verify the attacks.

The Russian ceasefire, coinciding with the 80th anniversary of the World War Two defeat of Nazi Germany, went into effect at midnight Moscow time (2100 GMT).

As part of the anniversary events, Russian President Vladimir Putin is hosting Chinese President Xi Jinping and other leaders in Moscow, and will review a military parade on Moscow's Red Square on May 9.

Ukraine has not committed to abide by the Kremlin's ceasefire, calling it a ruse by Putin to create the impression he wants to end the war, which began when Russia launched a full-scale invasion of Ukraine in February 2022. Putin says he is committed to achieving peace.

Ukraine launched successive drone attacks on Moscow this week, which had forced the closure of airports in the Russian capital and the grounding of airliners.

Apart from the Ukrainian air force reports about the two launches of guided bombs, there were no reports in Ukraine of any Russian long-range drones or missiles being launched on Ukrainian cities early on Thursday.

As of 3:45 am (00:45 GMT), the capital Kyiv was quiet, in contrast to 24 hours earlier when the city had reverberated with the sound of explosions from waves of Russian airborne attacks, and outgoing Ukrainian anti-aircraft fire.

It was not immediately clear if there was a pause in fighting on the frontlines between Russian and Ukrainian forces. A Reuters witness near the front in eastern Ukraine said early on Thursday he could hear no sounds of fighting.

Ukraine's President Volodymyr Zelenskiy said on Wednesday that his country stood by its offer to observe a 30-day ceasefire in the war with Russia.

"We are not withdrawing this proposal, which could give diplomacy a chance," Zelenskiy said in his nightly video address.

Russia, he said, had made no response to the 30-day offer except for new strikes.

"This clearly and obviously demonstrates to everyone who the source of the war is," the Ukrainian president added.

Zelenskiy also appeared to acknowledge the numerous drone attacks that have been targeting Russian sites, including the city of Moscow, as the World War Two commemorations approached.

"It is absolutely fair that Russian skies, the skies of the aggressor, are also not calm today, in a mirror-like way," he said on Wednesday.

Moscow Mayor Sergei Sobyanin, in a series of posts on the Telegram messaging app over a five-hour period, said 14 drones headed for the capital had been repelled or destroyed. This happened before the Kremlin-sponsored three-day ceasefire took effect.

The U.S. proposed the 30-day ceasefire in March and Ukraine agreed. Russia has said such a measure could only be introduced after mechanisms to enforce and uphold it are put in place.

Both countries are under pressure from U.S. President Donald Trump to bring a swift end to the war, the biggest conflict in Europe since World War Two.

Russian Foreign Ministry spokeswoman Maria Zakharova expressed surprise at remarks from U.S. envoy Keith Kellogg that Putin may be obstructing a comprehensive ceasefire.

"The only obstacle to the ceasefire is Kyiv, which violates agreements and is unwilling to seriously discuss the terms of a long-term ceasefire," Zakharova said.