A research team, including contributors from Near East University, has conducted an innovative study examining the influence of renewable energy on the stability of exchange rates in emerging economies. This research is pivotal in understanding the intersection of sustainable energy, economic growth, and climate action.

Analyzing data using fully modified and dynamic ordinary least square methods, the study explores how renewable energy usage, alongside other economic factors like real interest rates, gross domestic product, balance of payments, and inflation rates, impacts the exchange rate stability in emerging economies. The findings reveal a complex interplay between these variables and their effect on currency values.

The research indicates that high real interest rates and robust economic growth lead to currency appreciation. Conversely, high balance of payments, inflation rates, and renewable energy consumption are associated with currency depreciation. The study, through Pedroni and Kao cointegration tests, also establishes a long-term relationship among these variables.

From a policy perspective, the study suggests that minimizing balance of payments and inflation rates is crucial for exchange rate stability. Conversely, promoting economic growth and increasing real interest rates are recommended strategies for enhancing currency stability.

Furthermore, the research acknowledges the cost implications of renewable energy sources compared to fossil fuels. It recommends government subsidies for renewable energy to balance the goals of exchange rate stability and achieving carbon neutrality. This approach aligns with the global objectives of promoting affordable and clean energy, fostering economic growth, and combating climate change.

In conclusion, the study co-authored by Near East University researchers offers valuable insights into the role of renewable energy in the broader economic context. It underscores the importance of integrating sustainable energy practices into economic policies, contributing to the global agenda for sustainable development and a low-carbon future.

For further details, access the original paper from the publisher’s link:

https://link.springer.com/article/10.1007/s11356-022-23911-y