Dependence on Russian Resources and Exchange Rate Fluctuations During the Russia-Ukraine Conflict

This article aims to explore the role played by dependence on Russian resources on the exchange rate of non-belligerent economies, following the Russia-Ukraine conflict. A mixed effect model, which considers both the long-term impact of the conflict itself and the influence of significant sub-events during the conflict, is established to derive the impact pattern of dependency on Russian petroleum, gas, and cereal on exchange rate fluctuations. The model results indicate that dependence on Russian petroleum and natural gas does not have a significant impact on exchange rate fluctuations in the long term, but it is related to a significant depreciation on the dates of conflict-escalating events and economic sanctions. On the other hand, high dependence on Russian cereals is significantly associated with long-term currency depreciation.