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Exchange Rate And Economic Growth. The Case Of Romania

Author

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  • Nicolae Ghiba

    (Alexandru Ioan Cuza University of Iasi, Romania)

Abstract

Considering the difficulties created by the economic crisis, many exporters have criticized the National Bank of Romania (NBR)’s policy regarding the exchange rate evolution. They argue that depreciation is a necessary condition for recovery and not financial stability. On the contrary, Romania cannot afford a shock in the exchange rate level. The risk associated with such a measure is too high for an emerging country and it annihilates any export competitive advantages. Therefore, depreciation may delay the imperative of Romanian economic recovery. A solid economic recovery should have as starting point a financial system sound and stable. Excessive exchange rate depreciation jeopardizes the financial soundness of banks and the borrower’s ability to repay their loans. Therefore, it creates inflationary flare-ups, particularly dangerous for the economy of any state.

Suggested Citation

  • Nicolae Ghiba, 2010. "Exchange Rate And Economic Growth. The Case Of Romania," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 2(4), pages 73-77, December.
    • Handle: RePEc:jes:wpaper:y:2010:v:2:i:4:p:73-77
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    Cited by:

    1. Atoi, Ngozi Victor & Nwambeke, Chinedu G., 2021. "Money and Foreign Exchange Markets Dynamics in Nigeria: A Multivariate GARCH Approach," MPRA Paper 109305, University Library of Munich, Germany.
    2. Faris Alshubiri, 2022. "The Impact of the Real Interest Rate, the Exchange Rate and Political Stability on Foreign Direct Investment Inflows: A Comparative Analysis of G7 and GCC Countries," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 29(3), pages 569-603, September.

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