Roubini: Baltics, Bulgaria next for devaluation

The Baltic nations and Bulgaria may be the next emerging-market countries to weaken control of their currencies as the global economy worsens and eastern Europe descends into crisis, New York University professor Nouriel Roubini said, Bloomberg reports.

“If fundamentals are out of line you cannot maintain a fixed exchange rate, you’re going to eventually have a currency crisis,” Roubini, who forecast the U.S. recession two years ago, said in an interview from Moscow today. “The Baltics are under pressure and Bulgaria’s currency board is under pressure.”

Kazakhstan let the tenge weaken as much as 22 percent today, after keeping it stable since November by selling foreign-currency reserves. Russia’s ruble, managed against a basket of dollars and euros, has dropped 35 percent against the dollar since August, amid sliding commodity prices. The Belarusian ruble, also controlled through interventions, was devalued by 20 percent in January, while Ukraine’s hryvnia has lost 40 percent to the dollar in the past six months.


Bloomberg

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