Current-account deficits in Bulgaria and the Baltic states put the countries at risk of currency crises that may lead to problems in banking and housing, said New York University professor Nouriel Roubini, in an interview from a conference run by Troika Dialog in Moscow.
"If fundamentals are out of line you cannot maintain a fixed exchange rate, you’re going to eventually have a currency crisis." Bulgaria’s lev is pegged at 1.95583 per euro. The country’s drained 16 percent of its reserves to $16.8 billion in the second half of last year, according to International Monetary Fund data.
"A currency crisis becomes a banking crisis, a housing crisis, a sovereign debt crisis. It becomes a corporate crisis because each segment in these economies has a large amount of foreign liabilities."
Source: BalticBusinessNews.com/Aripaev.ee
