Encouraged by a message from Bank of America with precise projection of Baltics devaluation I have decided to summarize why the analysts could be right in their estimations. Apart from inflation, economic recession and credit crunch, as stated by the BoA, I would like to stress other interrelated macro economic phenomena, which theoretically should be ended by a change in currency rates. Mainly, these are:
1. Hot money effect
2. Current account deficit
3. Reserves/ M2 + Gross external debt coverage
4. Low competitiveness
5. Parex Bank… and international relations
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