1. Currency Crises in Post-soviet Economies — a Never Ending Story?
Marek Dabrowski
Currency Crises in Post-soviet Economies — a Never Ending Story?
Presentation at the Eighteenth World Congress of the International Economic Association, Santa Fe, Mexico City, June 22, 2017

2. Depreciation of the FSU currencies against USD, in %, 31.12.2013 – 31.12.2015

3. Direct causes of the 2014-2015 crisis
Global: tightening of the US monetary policy  USD appreciation  capital outflow from EMEs  growth slowdown in EMEs  decline in price of oil and other commodities
Regional: Ukrainian conflict  deterioration of business climate, sanctions, counter-sanctions, cross-country contagion
Domestic: imprudent macroeconomic policy in some countries, financial sector fragility, mistakes in crisis management

4. Index of commodity prices, 2005=100
Source: IMF Primary Commodity Price System,

5. RUR/USD exchange rate and oil prices

6. However
Currencies of other oil exporters depreciated less, and their GDP declined less
FSU oil producers accumulated reserve funds during the oil boom in 2000s
This was not the first regional currency and financial crisis ( , , , )
Important analogy with the crisis

10. Depreciation of FSU currencies against USD, in %, 30.06.1998 – 30.06.1999

11. Depreciation of FSU currencies against USD, in %, 30.06.2008 – 30.06.2009

12. Sources of macroeconomic fragility in FSU countries
Psychological legacy of the previous crises
Higher inflation than in other regions
High level of spontaneous dollarization
Political dependence of central banks
Lack of trust to commercial banks both state-owned and privately owned (by oligarchs)
In such an environment the IMF recommendation to adopt inflation targeting and floating exchange rate – premature

14. Annual inflation, e-o-p, in %, 2002-2012

15. Microeconomic factors
Poor business climate and governance, corruption, predatory behavior of public administration and law-enforcement agencies, political dependence of judiciary
Expropriation risk
Defense strategies of business:
large business – offshore affiliates, capital flight
small business and population – moving to shadow sector and using cash dollars

18. Russia: net outflow of private capital, USD billion, 2000-2015

19. See: Marek Dabrowski Currency crises in post-Soviet economies — a never ending story?, Russian Journal of Economics, Vol. 2, Issue 3, September 2016, pp ,