The currency crisis leads toward that situation at where serious doubts are occurs to know about whether the central bank of the country has appropriate reserves for the foreign exchange which are required to maintaining the fixed exchange of the country. Sometime the speculative attacks of the foreign exchange market become the reason to accompanying the crisis. By declining the values of the country’s currency the crisis of the currency can be occurs. The crisis has inverse relationship with the economy of the country which can be generates the exchange rate instabilities. The interest rate is rising for the central bank by which the foreign reserves can be selling and the supply of the currency can be shrinks for creating the capital outflows.

        When the currency of the country is going to be devalue it major reasons is it imports are decreasing and exports are increasing that why the export of the country becomes more cheaper and imports re going to be expensive. The balance of payment is improving by this favors such as the imports are decreasing and exports are increasing by which the trade deficit will be shrieked. Devaluation of the home currency can help the correct balance of payment for reducing the deficit. This essay discusses about the currency crisis of the Argentina and Turkey, it also analysis the issues of the currency crisis and provides the expected solution as well.

Countries having Currency Crisis

        According to the emerging markets the occasional shiver investors are sending by the Turmoil which is considered its backbone. The admirable record is used to predicting the past currency crisis which is presented in the new article.  This previous data is presented in the index named as the “Damocles” and the data is presented in this article by using the various eight indicators which are;

Export ratio

Imports cover

Current account and real effective exchange rate deviation

Short term external debt

Real short-term interest rate

Broad money

Non-foreign-direct-investment gross inflows

Fiscal and current account

            By using the above discussed eight indicators the currency crises have been determined for the various countries and below given chart are representing the number of the counties which are suffering from the crisis of the currency. This best suited source for selecting the country to conducting the analysis about the currency crisis (Watts 2018).

Source: https://www.marketwatch.com/story/these-7-countries-are-most-at-risk-of-a-currency-crisis-nomura-2018-09-10

        The country is selected from this chart is Argentina’s for analyzing its currency crisis. The results of the Argentina can be shocking for the crisis of the country because it’s going down already more than 50% against the dollar from the beginning of the year to till now. It headlines have made out in the last week which is related to the plunged of the currency USDARS,-0.0005% which is almost lower than the green back. This ratio have forced the IMF (International monetary fund) and government of the Argentina for scrambling the reassure investors whoever the central bank of the Argentina have been hiked due to its interest rate which is roundabout 45% to 60%.

        Emergency increments have been delivered by the central bank of the Argentina and its rates have been lifting from 45 to 60 percent. These rates are vowing for not to cut till at the end of this year. These all moves must be stop for plunging the two day and it can be too its prices as USDAR, -0.0059% which is used for all time at low level. The currency is going to down which is more than 16% from last week and currency is down more than 50% from the beginning of the year to till now.

        The currency of the Turkey is also dropping sharply and the Turkey lira is USDTRY, -0.0631% and these values are concluded after resigning the governor of the central bank of the Turkey. The Argentina and Turkey is suffering from the same variety of the problems, these both countries are carrying a large deficit accounts, it have homegrown problems, various standards for the balance of the nation for trade, economists noted, foreign investment net earnings and transfer of the net cash.

Source: https://www.marketwatch.com/story/heres-why-emerging-markets-turmoil-will-continue-to-keep-traders-on-their-toes-2018-08-31

        The above given chart is representing the countries according to the large current account deficit from which these countries are suffered a most. Considering the huge debts in terms of dollars, they are exposed which is quite tough to repair or service since the weakening of their normal or domestic currencies occurs regarding the greenback.  It is argue by the experts Argentina and Turkey is facing serous crunch.  Many other countries are not able to preventing these countries from financial crisis. It is noted by the Micheal Arone who is the chief of the investment strategies for global advisor of the state street “Turkey is too small to spark global contagion”.

        Argentine and Turkish are despairing in the category of the “idiosyncratic but to shakes the prevailing concerns is too hard because the level of debts are too high in the emerging markets. It is appears as the gradual turn for the monetary policy at global level as water torture. The misery which is created in the Argentina and turkey it has been generated by them. The Us dollar had buy by spending the 38.75 pesos after increasing its price at 14 % which have made it price at 41.50 pesos when the emergency rate are increased by the Argentina’s central bank. This would be the cause for lifting it benchmark from 45 to 60 percent. From the beginning of the year to till now the argentine pesos have been fallen around the 52% against the dollar.

References of Currency Crisis

Watts, William. 2018. These 7 countries are most at risk of a currency crisis: Nomura. Market Watch.