Disparities of Exchange Rates in CEE Countries

Abstract

This paper analyzes disparities among nominal and real exchange rate movements across the Central and Eastern European (CEE) countries from 1991 to 1996. The method of analyzing such processes is to examine whether the differentials of exchange rate changes converge or diverge over time. Currently nine countries in Central and Eastern Europe have formally applied for full membership in the European Union. The results support convergence in general, but indicate a wide disparity in the degree of convergence. From the real exchange rate standpoint the paper identifies the best candidates to join the European Union in the first round of accession.Exchange rates, Convergence, Transition, European Union