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Romania, the Czech Republic and Hungary are at risk of a monetary crisis in 2023, according to Nomura analysts
The Czech Republic, Romania and Hungary face the risk of a crisis of the exchange rate next year, as the fiscal and foreign challenges multiply, consider the analysts of the investment bank Nomura Holdings Inc. in a report published on Monday, says Bloomberg.
The extent of import coverage by foreign reserves, short-term interest rates, as well as fiscal deficit and current account deficit measures, according to Nomura’s Damocles Index, which looks at the vulnerability of a group of 32 emerging markets to a monetary crisis.This warning relies on the analysis of eight indicators, including the extend of import coverage by foreign reserves, short-term interest rates, as well as fiscal deficit and current account deficit measures, according to Nomura’s Damocles Index, which looks at the vulnerability of a group of 32 emerging markets to a monetary crisis.
Egypt, Sri Lanka, Turkey and Pakistan have already faced a monetary crisis, which they have not surpassed yet, say the analysts Rob Subbaraman and Si Ying Toh in the report published on Monday.
The Hungarian Forint is among the emerging currencies with the weakest performances this year after the European Commission postponed the release of funds from the Resilience Mechanism. Similarly, the Romanian leu and the Czech Kron lost more than 8% of the value by comparison to the American dollar.
The vulnerability of the currencies of the emerging states is now at the highest level of the last two decades and this is a ‘serious warning’ with regard to the extended and growing risks, shows the report of the analysts in Nomura.