The economic crisis in Eastern Europe avoided none of the former Soviet republics. The five international currencies with the poorest results this year are the currencies of the former Soviet republics, says an article on “Корреспондент.net”, quoted by IPN.
The journalists of this publication tried to find out why the currencies of the countries from Eastern Europe have depreciated. Thus, champions by the level of depreciation are:
Ukrainian hrivna– 51%;
Russian ruble – 37%;
Belarusian ruble – 34%;
Azeri manat – 26%;
Moldovan leu – 25%.
According to the publication, the reasons for the sudden depreciation of the currencies of these countries are different, but there are a number of common causes. According to Vasili Yurchishin, economic problems director at the Center “Razumkov”, among the common reasons are the low competitiveness of the economies of the former Soviet republics, their dependence on narrow markets, the keeping of the planned economy system and their increased dependence on Russia’s economy.
An important role in the appearance of the crisis was played by the reduction in remittances, especially from Russia, which is a kind of Mecca for the migrant workers from the former Soviet area.
The sudden depreciation of the Russian ruble and the contraction of Russia’s economy are considered the main reasons for the difficulties experienced now by the Soviet republics. During a year, the ruble depreciated by 37%, the rate of inflation reached two digits and Russia’s GDP is forecast to decrease by 3-5%.
Thus, for the former Soviet republics, a currency shock that happens in one of these affects all the other countries. However, the countries overcome the problem of currency depreciation in a different way.
Kazakhstan now manages to overcome the situation in the best way despite the decline in the price of crude oil. Moldova also shows relatively good stability.
“Moldova’s exports are modest and this affects the depreciation. It also lost the Russian market,” said the director of the Ukrainian analytical center Alexandr Ohrimenko, explaining the depreciation of the leu. Russia’s ban on the import of Moldovan agrifood products seriously hit the country’s economy.
The depreciation was also caused by the panic in the banking sphere following politicians’ statements as a result of which the people started to withdraw massively their money from banks. The National Bank of Moldova had to place three large banks under special administration.
The experts do not think that the situation in Moldova is critical. “The Moldovan economy faces difficulties in coping with competition, but changes and reforms are actively promoted there, much more actively than in Ukraine,” stated Vasili Yurchishin.
The Ukrainian hrivna has now the worst performance. The drastic depreciation of the currency brought the country close to a default. The depreciation in Ukraine is due to other reasons than in the other ex-Soviet states. The war seriously affected the country, namely is eastern industrial regions, where one fourth of Ukraine’s economy is concentrated.
Source: Forbes Ukraine
