When faced with a financial crisis, countries with limited foreign reserves can either stick to a fixed exchange rate or allow their currency to devalue. Research on East European countries shows that devaluing the currency leads to less economic loss compared to maintaining a fixed rate. This is because devaluation helps correct the balance of payments more effectively by stimulating exports and attracting capital inflows. The evidence from the 1998-99 period after the Asian and Russian currency crises, as well as the 2008-09 financial crisis, supports this conclusion.