The civil unrest in Ukraine may exacerbate the already significant Forex and Debt Risks | NOURIEL ROUBINI BLOG

Saturday, December 21, 2013

The civil unrest in Ukraine may exacerbate the already significant Forex and Debt Risks

The civil unrest in Ukraine triggered by the government's last-minute U-turn on EU integration and movement towards Russia may exacerbate the country's already significant forex and debt risks
"Ukraine's large twin deficits and short-term external debt, inflexible currency and low forex reserves (2.2 months of imports and a third of short-term external debt) make it one of the most vulnerable emerging markets to a currency crisis. This risk has now been exacerbated by the civil unrest triggered by the government’s last-minute U-turn away from the EU integration and towards Russia. Devaluation has so far been avoided mainly due to: (1) positive sentiment of Ukrainian retail depositors, used to depreciation pressure; (2) high costs of hedging for corporates and (3) capital and currency controls. A reversal in sentiment, however, could increase the demand for cash forex and trigger disorderly devaluation in a matter of days," Evghenia Sleptsova, RGE Senior Analyst for Russia and CIS, Country Insights, told Interfax-Ukraine. - via http://en.interfax.com.ua
Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics

Nouriel Roubini, (born March 29, 1958, Istanbul, Turkey), Turkish-born American economist and educator who was best known for predicting the 2007–08 subprime mortgage crisis in the United States and the subsequent global financial crisis.

Born to Iranian Jewish parents, Roubini moved with his family to Iran and Israel before they settled in Italy in 1962. After a year at Hebrew University of Jerusalem, he studied economics at Bocconi University in Milan (B.A., 1982) and Harvard University (Ph.D., 1988), where he specialized in macroeconomics and international economics. He joined the economics faculty at Yale University in 1988 and taught there until 1995, when he moved to New York University. He also served as a visiting scholar to the International Monetary Fund (IMF), was a research associate with the National Bureau of Economic Research (NBER), held single-year terms on the White House Council of Economic Advisers (1998–99) and at the U.S. Department of the Treasury (1999–2000), and cofounded (2004) the consulting firm Roubini Global Economics. Roubini spent much of his early career studying countries that experienced extreme economic failures, such as Mexico (in 1994), Thailand and other countries associated with the 1997 Asian financial crisis, Russia (1998), and Argentina (2000). He determined that each shared one common element: a massive current account deficit.(www.britannica.com)

Nouriel Roubini is the Chairman and CEO of Roubini Macro Associates, LLC, his own global macroeconomic consultancy firm. He is also a professor of economics at New York University’s Stern School of Business. Dr. Roubini has extensive policy experience as well as broad academic credentials. From 1998 to 2000, he served as the senior economist for international affairs on the White House Council of Economic Advisors and then the senior advisor to the undersecretary for international affairs at the U.S. Treasury Department, helping to resolve the Asian and global financial crises, among other issues. The International Monetary Fund, the World Bank and numerous other prominent public and private institutions have drawn upon his consulting expertise.