Deposits or government bonds: comparing returns in hryvnia and foreign currency

Ukrainians who want to preserve savings and earn additional income increasingly compare bank deposits with domestic government bonds (OVGZ). Both instruments allow earning in hryvnia, US dollars, and euros, but differ in taxation, early withdrawal terms, potential yield, and risk levels.

The main advantage of OVGZ is exemption of individuals' income from taxation. Deposits, in turn, are convenient because they allow choosing the term of placement in advance, and in some cases - accessing money before the agreement ends.

To make the right choice, one should consider not only the interest rate, but also net yield, investment term, currency of savings, and the need for quick access to funds.

Deposits in hryvnia, dollars, and euros

A bank deposit is placement of funds in a bank for a fixed term at interest. The rate depends on currency, term, amount, replenishment capability, and early withdrawal conditions.

Hryvnia deposits

Deposits in the national currency usually offer the highest nominal rates among the three currency options. They suit those who receive salary in hryvnia, plan major purchases in Ukraine, or want to earn interest without buying securities.

Advantages:

• higher percentage yield compared to foreign-currency deposits;
• clear interest accrual terms;
• possibility to choose a deposit for several months or a year or more;
• wide choice of bank offers;
• state deposit guarantee system.

Disadvantages:

• interest is taxed, so actual yield is lower than advertised;
• inflation can reduce real purchasing power of savings;
• if the hryvnia weakens, savings may lose part of their value in dollar or euro equivalent;
• early withdrawal of a term deposit may be prohibited or result in interest recalculation at a reduced rate.

Deposits in US dollars

Dollar deposits suit those who want to keep savings in an international reserve currency and do not plan to convert them to hryvnia in the near future.

Advantages:

• keeping savings in dollars;
• possibility to earn additional interest income;
• convenience for those planning expenses abroad or paying in dollars.

Disadvantages:

• interest rates are usually significantly lower than hryvnia rates;
• interest is also taxed;
• exchanging hryvnia and dollars incurs conversion costs;
• the currency guarantee on a deposit does not eliminate exchange rate risks: the dollar may weaken against other currencies.

Deposits in euros

Euro deposits appeal to those saving for travel, education, relocation, or other expenses in eurozone countries.

Advantages:

• savings in the currency of future expenses;
• possibility to earn interest without investing in securities;
• protection against hryvnia weakening relative to the euro by keeping savings in this currency.

Disadvantages:

• rates often lower than for hryvnia deposits;
• interest is taxed;
• euro-to-dollar and euro-to-hryvnia exchange rates may fluctuate;
• buying and selling euros may involve additional expenses.

Taxes and guarantees on deposits

Individuals' income from bank interest in Ukraine is subject to personal income tax and military levy. Therefore, comparing a deposit with OVGZ solely by the rate advertised by the bank is incorrect: one must consider the amount remaining after taxes.

During martial law and for three months after its termination or cancellation, a guarantee applies for reimbursement of 100% of the bank deposit amount together with accrued interest upon occurrence of legally stipulated grounds for payment. After that, the maximum guaranteed amount should be UAH 600,000. Deposit Guarantee Fund for individuals

It is important to distinguish between guaranteeing a bank deposit and safety of funds in an investment account: the state deposit guarantee does not automatically extend to purchased securities.

OVGZ in hryvnia, dollars, and euros

OVGZ are government securities through which Ukraine raises funds to finance state expenditures. An investor buys bonds, and the state undertakes to pay the stipulated income and return the face value at redemption.

The face value of one bond is UAH 1,000, USD 1,000, or EUR 1,000. The actual purchase price may differ from the face value depending on the issue and transaction conditions. Ministry of Finance of Ukraine

Hryvnia OVGZ

Hryvnia bonds appeal to investors who want to earn in the national currency and incur lower tax costs.

Advantages:

• individuals' income from coupon payments and investment profit is tax-exempt;
• redemption date can be chosen in advance;
• yield can compete with hryvnia deposits;
• payments on government bonds are guaranteed by the state;
• no need to open a regular bank deposit to receive investment income.

Disadvantages:

• to purchase, one must open a securities account and comply with intermediary requirements;
• if sold before maturity, the price may be lower than the purchase price;
• commissions may be charged for purchase, custody, or sale;
• for long investment terms, money may be less accessible than funds in a current account;
• there remains a risk related to the state's financial condition, despite government payment obligations.

OVGZ in US dollars

Dollar bonds suit those who already hold savings in dollars and want to earn income in the same currency.

Advantages:

• income is paid in the currency of denomination;
• individuals' interest and investment profit are not taxed;
• one can fix the yield conditions of a specific issue when buying and holding to maturity.

Disadvantages:

• yield is usually lower than on hryvnia instruments;
• availability of issues and purchase conditions depend on the intermediary;
• commissions can reduce the final profit;
• selling before maturity may result in a loss.

OVGZ in euros

Euro bonds are intended for those who want to keep savings in euros and earn income in that currency.

Advantages:

• possibility to receive income and return of face value in euros;
• no tax on investment income for individuals;
• possibility to choose the maturity period for future expenses in the eurozone.

Disadvantages:

• yield is usually low compared to hryvnia bonds;
• not all intermediaries offer the same selection of issues;
• commissions and purchase price affect actual yield;
• early sale depends on market price and presence of a buyer.

Important: OVGZ yield depends on the specific issue, maturity, coupon payments, and purchase price. Therefore, before buying, one should compare yield to maturity, not just the coupon size.

To compare deposits, we will use the Ukrainian UIRD rate index, which reflects offers from 20 leading banks, and for OVGZ, the Ministry of Finance auction results from October 13 and data on foreign-currency issues.

Bank deposit rates

Annual rates before tax, data as of October 13, 2026.

The highest average rate in this sample is 14.61% per annum for 9-month hryvnia deposits. For dollar deposits, the maximum among the listed terms is 1.13% for one year; for euro deposits, it is 0.46%, also for one year.

These are average indicative figures, not the maximum advertised rates of individual banks. A specific bank may offer better terms, so before opening a deposit, check current offers.

Current OVGZ yield

According to the results of the Ministry of Finance auction on October 13, 2026, the weighted average yield of hryvnia OVGZ was 15.09% for the issue maturing September 15, 2027, and 16.45% for the issue maturing March 21, 2029.

Sources: Ministry of Finance auction results and OVGZ payment calendar. For foreign-currency papers, benchmarks for individual issues are given, not a single market-wide rate. Coupon rate and yield to maturity are different indicators.

For a correct comparison, one must consider not only the announced rate, but also the bond purchase price, intermediary commissions, time to maturity, and payment schedule. This is especially important for foreign-currency OVGZ, which may be sold at a discount or premium to face value.

How much remains after taxes?

Interest on individuals' bank deposits is subject to personal income tax at 18% and military levy of 5%. Income of individuals from OVGZ is exempt from these taxes.

Net yield is calculated as nominal rate multiplied by 0.77. The calculation is approximate, without interest capitalization, commissions, or exchange rate effects. For OVGZ, yield without taxes is indicated, but the actual result depends on the terms of the specific issue.

Conclusion

As of mid-October 2026, hryvnia OVGZ based on recent auction results provide higher net yield than average bank deposit rates. At the same time, dollar and euro bonds may also be more advantageous than foreign-currency deposits thanks to the combination of interest income and tax benefits.

However, the choice depends on the investor's goals. If money may be needed at any moment, a deposit with early withdrawal option may be more convenient. If savings can be placed for a fixed term and bonds held to maturity, OVGZ look more attractive in terms of after-tax yield.

Important: the yield of specific foreign-currency OVGZ must be checked immediately before purchase. The given dollar and euro indicators are not universal rates for all available issues.