<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>We use the Twitter application programming interface to construct a novel indicator capturing the varying perceptions of geopolitical risk related to the war in Ukraine. We show that the Twitter variable is a statistically significant determinant of the EUR/PLN exchange rate following the invasion. We estimate that the war in Ukraine was responsible for an increase in the EUR/PLN exchange rate of about 5.0% in the first 2 weeks following its breakout and that the weakening of PLN contributed to an increase of headline inflation in Poland by about 0.33 percentage points. Our findings suggest that monetary policy autonomy can be substantially constrained due to conflicts in nearby countries. Therefore, they provide an argument for Poland in seeking Eurozone membership as a way to contain the impact of geopolitical factors on exchange rate volatility, which is likely to remain at play in the longer run.</p>
</abstract>

We use the Twitter application programming interface to construct a novel indicator capturing the varying perceptions of geopolitical risk related to the war in Ukraine. We show that the Twitter variable is a statistically significant determinant of the EUR/PLN exchange rate following the invasion. We estimate that the war in Ukraine was responsible for an increase in the EUR/PLN exchange rate of about 5.0% in the first 2 weeks following its breakout and that the weakening of PLN contributed to an increase of headline inflation in Poland by about 0.33 percentage points. Our findings suggest that monetary policy autonomy can be substantially constrained due to conflicts in nearby countries. Therefore, they provide an argument for Poland in seeking Eurozone membership as a way to contain the impact of geopolitical factors on exchange rate volatility, which is likely to remain at play in the longer run.

The Russian invasion of Ukraine and the exchange rate of the Polish zloty: A fallacy of monetary autonomy?

International Journal of Management and Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

We use the Twitter application programming interface to construct a novel indicator capturing the varying perceptions of geopolitical risk related to the war...

The Russian invasion of Ukraine and the exchange rate of the Polish zloty: A fallacy of monetary autonomy?

Article Category: Empirical Paper

Publié en ligne: 22 mars 2024

Pages: 33 - 45

Reçu: 06 juil. 2023

Accepté: 06 déc. 2023

DOI: https://doi.org/10.2478/ijme-2023-0026

Mots clés
conflict, currency volatility, geopolitical risk, regional spillovers, the Russia–Ukraine war

© 2023 Jakub Borowski et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

The Russian invasion of Ukraine and the exchange rate of the Polish zloty: A fallacy of monetary autonomy?

Article Category: Empirical Paper

Publié en ligne: 22 mars 2024

Pages: 33 - 45

Reçu: 06 juil. 2023

Accepté: 06 déc. 2023

DOI: https://doi.org/10.2478/ijme-2023-0026

Mots clésconflict, currency volatility, geopolitical risk, regional spillovers, the Russia–Ukraine war

© 2023 Jakub Borowski et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Mots clés
conflict, currency volatility, geopolitical risk, regional spillovers, the Russia–Ukraine war