Risk-Free Rates:
Hryvnia · US Dollar · Euro

Table 1. The international view – 10-year horizon

* A 10-year dollar base adjusted by the current inflation differential of the two currencies; updated with every new inflation print. In the headline tables values are rounded to 0.1 p.p.; calculations are performed on unrounded values.

Table 2. Ukraine's internal circuit

The internal curve ends at ~3.3 years: no hryvnia market exists beyond that tenor, and no point of this curve can be presented as a 10-year rate. We publish it nonetheless – for capital inside the hryvnia circuit it is the working benchmark at the tenors that exist. One OVDP issue with an administratively distorted yield is excluded (UA4000239073, 1134 days, 11.95% against 16.49% for the neighbouring issue at the same auction: since 16.07.2026 it has been on the NBU list of benchmark OVDP that banks may use to cover up to 60% of their required reserves – subparagraph 5 of paragraph 1 of NBU Board Decision No. 752-rsh of 23.11.2017, the list in its first indent as amended by Decision No. 314-rsh of 20.09.2026).

This issue's calculation: November 2026

US dollar

Euro

The 10-year German Bund yield (zero credit spread; Germany's CDS of 12 basis points (bp) is negligible): r_f EUR = 3.32%.

Hryvnia – the international derivation

The simple-difference approximation: 4.63% + (10.0% − 3.7%) = 10.93%.

Hryvnia – the internal circuit

Cross-check of the internal rate

Both routes here are backward-looking: a bond yield looks 12 months forward, while year-over-year CPI looks 12 months back. With forward-looking inputs the estimate is higher – household inflation expectations (14.25% for the next 12 months, NBU survey, September 2026) would give ~14.7%; this gap measures how much future disinflation the OVDP market has already priced in – and the surveys have not.

What the risk-free rate is and why it matters

The risk-free rate is the return on an investment whose outcome the investor knows in advance: the issuer cannot fail to pay (no default risk), and the instrument's term matches the investor's horizon (no reinvestment risk). It has only two components: the real reward for postponing consumption – the price of giving up money today for tomorrow – and compensation for the currency's inflation. The first is roughly the same everywhere by its nature; the second is each currency's own. So in essence there is one risk-free rate, and what separates currencies is inflation: the difference between the hryvnia and dollar rates is first of all the difference in their inflations. Two practical rules follow: cash flows are discounted at the rate of the currency they are denominated in, and the rate of one currency can be restated into another through the inflation differential – which is exactly how the hryvnia derivation in Table 1 is built.

The entire cost of capital stands on the risk-free rate: the cost of equity is the risk-free rate plus the equity risk premium (ERP) and the country risk premium (CRP); the cost of debt is the risk-free rate plus the borrower's credit spread. An error of one percentage point (p.p.) at this foundation shifts a company valuation by 5–20%, depending on the level of rates and the growth rate (for a growing perpetuity the relative value change per 1 p.p. of the rate ≈ 1/(k − g)) – which is why we publish the benchmark regularly and show the calculation in full.

Why the hryvnia gets two views

The NBU's currency restrictions have made Ukraine a separate financial ecosystem. NBU Board Resolution No. 18 of 24.02.2022 (paragraph 14) is built on the principle of "everything is prohibited except what is permitted": cross-border transfers are allowed only for a defined list of operations, and until August 2026 the purchase of foreign securities was not on it. Resolution No. 90 of 10.08.2026 (in force since 11.08.2026) did not widen that list: it added paragraph 12, index 19, under which a bank may sell securities of foreign issuers to its own individual client, delivered inside Ukraine's depository system, within a shared limit of UAH 200,000 a month at one bank, together with non-cash currency and bank metals. No money crosses the border, and paragraph 14 still does not permit a transfer to an account with a broker abroad: the easing runs inside the circuit, not through its wall. For legal entities and institutional investors nothing has changed. Building a position in US Treasuries (UST) or German government bonds (Bunds) from inside Ukraine is therefore practically impossible – external risk-free instruments are unavailable to hryvnia capital, and Ukraine's normalised Chinn–Ito capital-account openness index equals zero (latest available observation; the database is published with a lag of several years).

The hryvnia risk-free rate therefore has two distinct definitions, and we publish both:

• the international view (Table 1) – for an investor with access to global markets who values hryvnia cash flows from outside: the hryvnia rate is derived from the dollar rate through the inflation differential;
• the internal circuit (Table 2) – for capital locked inside the country, to which external instruments are unavailable: the rate is built from domestic instruments.

These are not two conflicting estimates of one indicator but different objects: the first answers "what a long hryvnia rate would be in an open world", the second – "what it actually is inside the closed circuit at the tenors that exist".

How to read the gap between them. The derivation moves with the inflation differential, the internal point with the OVDP market, and the distance between them shows how much disinflation the domestic market has already priced in. For long-dated hryvnia cash flows (the terminal value in a discounted-cash-flow (DCF) model), the international derivation serves as the anchor; the choice of the long anchor is a modelling decision to be disclosed in each specific valuation.

Methodology

US dollar. The 10-year US Treasury yield minus the US CDS spread (credit default swap – the market price of insurance against the issuer's default; it is what measures the residual credit risk). The United States no longer holds the top credit rating, so USTs are quasi-risk-free and this small credit risk is removed.

Euro. The 10-year German Bund yield: top credit rating, zero credit spread.

Hryvnia – the international derivation. No direct 10-year hryvnia instrument exists, so the hryvnia rate is derived from the dollar rate via the Fisher relation – through the difference of the two currencies' inflations (both readings from the same month). We use actual year-over-year inflation, not forecasts or surveys: actual values are observable, leave no room for subjective assumptions, and are precisely what lets the page update with every new inflation print. The cost of this choice is disclosed in "Limits of the method".

Hryvnia – the internal circuit. The closest domestic instrument to risk-free is hryvnia domestic government bonds (OVDP): government securities that the Ministry of Finance places at primary auctions. But even in its own currency the sovereign is not a risk-free borrower, so the sovereign's own credit (default) spread is removed from the OVDP yield:

r_f (UAH, internal) = yield on hryvnia OVDP (~1 year, primary auction) − sovereign credit spread by local-currency rating

With no 10-year point available, the benchmark is the ~1-year issue – the shortest clean market point (excluding issues with administratively distorted yields), comparable in horizon to the cross-check. The credit spread is taken at the sovereign's local-currency rating from the default-spread table (source 7).

The subtracted spread is the same rating-based quantity that returns to the cost of capital as a separate term (the sovereign credit spread in the cost of debt, the country premium in the cost of equity): subtracting it from r_f and adding it back in the premia offset each other, reproducing the observed yield – there is no double-counting of country risk. The resulting number is a computed anchor for building the cost of capital, not a yield any investor can "buy" in the market.

Cross-check. Each month the internal rate is checked against an independent bottom-up estimate: inflation (CPI, year over year) plus real GDP growth of the latest quarter – the same "inflation + reward for postponed consumption" logic, with the reward approximated by the economy's growth. It is a check, not a standalone estimate; a material divergence between the routes is explained in the issue commentary, never ignored.

Limits of the method

• The internal rate is not a 10-year rate and cannot be one. The longest clean market point on the hryvnia curve is ~3.3 years; stretching the internal rate to a 10-year horizon would be invention, not observation. For the long horizon only the computed international derivation exists (Table 1).
• Why the internal "risk-free" rate is below the key policy rate. It is a computed ("shadow") yield of a hypothetical default-free hryvnia issuer for building the cost of capital, not a rate at which anyone actually places money. NBU certificates of deposit are available to banks only and are an administrative tool of disinflation policy; their yield is not a market-equilibrium risk-free rate. The fact that even one-year OVDP trade below the key rate is another symptom of a closed circuit with excess hryvnia liquidity in the banking system.
• The international derivation uses actual year-over-year inflation, not expected inflation over the horizon: a choice in favour of observability and regular updating. Its cost: the derivation reflects the current, not the long-run, inflation differential.
• The shortest tenor currently offered on the OVDP primary market is about 11 months; no shorter market points exist, so the "one-year" point is also the shortest one.
• The credit spread is a rating-based, not a market-traded, quantity: no liquid market separately prices the sovereign's hryvnia credit risk inside the closed circuit. The default-spread table is calibrated on long-dated dollar instruments; applying it to a ~1-year hryvnia point is an approximation with tenor and currency imprecision of undetermined direction.
• A 10-year US CDS is published only in the quarterly update of source 7 (0.43% as of the 01.07.2026 edition); for the monthly cycle the daily 5-year spread is used, so the dollar risk-free rate is overstated by roughly 0.1 p.p.
• The credit spread in Table 2 is held constant across tenors – a simplification of the rating-based method, stated deliberately.

Sources

1. Ministry of Finance of Ukraine, OVDP primary auction results (weighted-average yields) – mof.gov.ua/uk/ogoloshennja-ta-rezultati-aukcioniv; data for the 27.10.2026 auction – NBU Depository open dataset bank.gov.ua/NBU_ovdp (days to maturity counted from the payment date)
2. NBU: key policy rate 16.5% since 30.10.2026 – bank.gov.ua; inflation expectations (survey, September 2026; Surveys_price.xlsx)
3. State Statistics Service: CPI, September 2026 (+10.0% y/y); GDP, Q2 2026 (+0.4% y/y)
4. US Treasury, daily par yield curve, close of 29.10.2026 – home.treasury.gov
5. BLS: US CPI, September 2026 (+3.7% y/y) – bls.gov/cpi
6. World Government Bonds: US 5-year CDS 34.91 bp; 10-year Bund 3.3185%; Germany CDS 12 bp (30.10.2026)
7. Damodaran A., Country Default Spreads and Risk Premiums – pages.stern.nyu.edu/~adamodar (current datafile edition: 01.07.2026; updates are quarterly, and every edition of the current year is checked via the datacurrent.html page)
8. NBU Board acts: Resolutions No. 18 of 24.02.2022, paragraph 14 – zakon.rada.gov.ua/laws/show/v0018500-22 (edition of 17.09.2026); No. 90 of 10.08.2026 – zakon.rada.gov.ua/laws/show/v0090500-26; Decision No. 752-rsh of 23.11.2017 on the formation and holding of required reserves, subparagraph 5 of paragraph 1 (the benchmark-OVDP list as amended by Decision No. 314-rsh of 20.09.2026) – bank.gov.ua/admin_uploads/law/Decision_23112017_752-rsh_kp.pdf (control copy); CIRA review "The cost of currency restrictions: $9–10 billion for 2022–2025" (27.07.2026) – cira.com.ua/en/market-reports/cina-valyutnih-obmezhen-9-10-mlrd-dol-za-2022-2025-roki
9. Chinn M., Ito H. The Chinn–Ito Financial Openness Index – web.pdx.edu/~ito/Chinn-Ito_website.htm (latest available observation)