The Effects of Currency Crisis-How the Russian-Ukrainian War Changed the Global Financial Landscape

Abstract

This study examines the impact of the Russian–Ukrainian war on global financial stability, focusing on currency crises, exchange-rate dynamics, and economic vulnerability during 2003–2024 with an outlook for subsequent years. The objective is to assess how geopolitical shocks, combined with global monetary tightening, influenced the frequency and intensity of currency crises across developed and emerging economies. The study applies a quantitative comparative methodology based on a modified Exchange Market Pressure Index (EMPI) using monthly IMF data on exchange rates, reserves, interest rates, and depreciation dynamics. Currency crises are identified through threshold-based criteria, enabling cross-country and temporal comparison. A conceptual framework explains how geopolitical risk affects currency markets, financial stability, and macroeconomic performance. The findings show that crisis episodes were more frequently concentrated around the Great Recession, the COVID-19 pandemic, and the Russian–Ukrainian war. Emerging economies were more vulnerable, experiencing stronger capital outflows, sharper currency depreciation, and more frequent crises, while developed economies were affected mainly through inflation and energy price shocks. The war intensified financial fragmentation, increased safe-haven flows toward the US dollar, gold, and Swiss franc, and raised systemic risks in debt, banking, and corporate sectors. The study concludes that differentiated macroeconomic strategies, stronger external buffers, and enhanced international financial coordination are necessary to reduce risks and preserve currency stability.