The paper analyzes the effects of macroeconomic development on exchange rates and aims to point out indicators with a significant impact on the Visegrad Group's domestic currencies. Steep changes causing the Visegrad Group’s currencies to either appreciate or depreciate against the US dollar may result in higher risks for investors and even deteriorate the competitiveness of the particular country. The paper presents several macroeconomic indicators and their influence on four currencies, namely the Czech crown, Hungarian forint, Polish zloty and the Euro. As the Slovak Republic introduced the Euro as its official currency, the paper also analyzes it's impact on the common currency of the Eurozone. To emphasize international competitiveness, the research apart from traditional economic indicators, serving as a focal point in theories for exchange rate determination, incorporated economic complexity and corruption score as well. The findings indicate that during the period between 2000 to 2017, the two common indicators i.e. total reserves and corruption played the key role in determining the year-end spot exchange rates of the Czech crown, Hungarian forint and the Polish zloty. Besides corruption score, economic complexity serves as another significant indicator merely influencing the direction of the Euro's and the Zloty’s Dollar exchange rate movement. The last section compares the results of the OLS analyses for each country and verifies their accuracy through robust regressions. Overall, the model for the Czech crown represents the highest accuracy, regarding its predictive ability.
Shifts in the values of macroeconomic indicators influencing the exchange rate of a particular currency may signal future monetary policy decisions. Several problems or opportunities can be exposed in terms of international trade, investment and other activities involving the conversion of a country's currency by monitoring the macroeconomic development. This paper aims to analyze a wide range of macroeconomic indicators with a potential effect on exchange rate movements in the Visegrad Group between 2000 and 2017. It provides an overview of economic indicators with a significant impact on the volatility of four currencies, the Czech crown, Hungarian forint, Polish zloty and the euro against US Dollar. The presented exchange rate models incorporate the USD/EUR since the Slovak Republic is part of the Eurozone. The paper analyzes the contribution of the Slovak Republic to the development of the euro as well as the importance of various endogenous and exogenous macroeconomic indicators in the Visegrad Group's exchange rate determination. The paper tests besides the traditional influence factors the relevance of economic complexity and corruption, which do not serve as a focal point in empirical exchange rate theories. The findings indicate that the end year spot exchange rates of the Czech crown, Hungarian forint and the euro, are merely influenced by the GDP per capita measured in current prices. For this reason, they have a significant role in predicting exchange rate movements across the Visegrad Group. Additionally, the last chapter compares the results of the employed methods. Overall, regarding the values of explained variance and the root mean square of error, the paper points out that the models established for the Czech crown and the euro are the most accurate.
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