Impact of the Russia-Ukraine War on Anchor Currency Choice: Evidence from the Caucasus and Central Asia

Abstract

This study shows that the Russia-Ukraine conflict has had a significant impact on the choice of anchor currency in countries of the Caucasus and Central Asia (CCA). Trade reallocation from the EU to the CCA region due to sanctions on Russia has increased the estimated weight of the euro (EUR) in CCA countries' de facto currency baskets.

Keywords: Exchange-Rate Determination, Euro Zone, International Currency