The Impact of the Russia-Ukraine War on European Union Currencies: A High-Frequency Analysis

Abstract

This academic study examines how the ongoing Ukraine-Russia war has affected the valuation of five European Union currencies: the Polish Zloty, Hungarian Forint, Czech Koruna,
Swedish Krone, and Romanian Leu. Using high-frequency time series data and advanced statistical models, we analyze a 522-week period from January 1st, 2013, to February 24th, 2023,
with February 24th, 2022, as a key focal point. The Russia-Ukraine war had varying effects
on the currencies of non-Eurozone countries. Poland, Hungary, and Sweden experienced significant impacts, while Czechia and Romania remained relatively stable. Our research also
highlights the stability of the Euro as a reserve currency, which attracts investors during times
of crisis and protects participating economies from currency fluctuations. Additionally, our
analysis underscores the distinct impact of war on these currencies, influenced by their unique
political, economic, and financial structures and strengths.

Keywords: Excahnge Rate, Currency, Europe, War

JEL Classification: D60, O40, O50