EXCHANGE RATE STABILITY AND ECONONIC GROWTH IN DEVELOPING ECONOMIES

This paper examines the critical relationship between exchange rate stability and macroeconomic performance, specifically focusing on economic growth in developing economies. Maintaining a stable national currency is a cornerstone of monetary policy, yet developing nations frequently face external shocks and currency volatility. This study analyzes the transmission channels through which exchange rate stability fosters gross domestic product growth, namely by reducing market uncertainty, encouraging foreign direct investment, and stabilizing domestic inflation. Utilizing a descriptive and comparative empirical methodology backed by recent macroeconomic indicators from Turkey, Kazakhstan, and Uzbekistan, the paper evaluates how currency fluctuations disrupt long-term business planning and trade balances. The empirical findings indicate that while moderate devaluations can occasionally boost export competitiveness, long-term exchange rate stability provides a more predictable environment that is essential for sustainable economic growth. Finally, the paper offers practical policy recommendations for central banks in developing economies on managing foreign exchange interventions effectively.