Risk Watchdog’s long-held view that the bolivar would sooner or later have to be devalued has finally materialised, with President Hugo Chávez on January 8 announcing the introduction of a dual exchange rate system.

Bolivars will now officially be exchanged for dollars at two rates, VEF2.6000/US$ and VEF4.3000/US$, as opposed to the VEF2.1500/US$ peg that had [Read more...]

The devaluation of the Vietnamese dong by 5% on November 25 comes as little surprise for anyone having observed Hanoi’s woes in trying to combine a fixed exchange-rate regime with strongly pro-growth fiscal and monetary policy in recent years. Previous devaluations (in December 2008 and March 2009 most recently) have done little more than to [Read more...]

Few countries have been as badly hit by the global downturn as Latvia.

According to a flash estimate released by the statistical office, the Latvian economy plunged by 18.4% y-o-y during the third quarter, which although below the consensus contraction of 19-20%, was nonetheless a horrific rate of decline. Indeed, this would mark [Read more...]

As the Latvian government proposes a bill to change mortgage regulation to ease the debt burden on households, Bruce Jeffery argues that the country may be one step closer to eventual devaluation of the currency peg.

 

 Standard Podcast [5:27m]
Play Now | Play in Popup | Download

Having recently returned from a week-long holiday in the Latvian Baltic sea resort of Jurmala, I felt the stark contrast between a wonderful summer holiday destination and the signs of an epic economic crisis. On the one hand I was impressed at the hospitality and pleasantness of this tiny Baltic Sea town, 20km from the [Read more...]

The sharp spike in Latvian interbank lending rates and the sovereign’s credit default protection premium gave a taste of what awaits the country in case of a devaluation, after key economic advisors to the authorities contemplated such a scenario. Justin Patrie discusses the immediate economic implications of a Latvian currency devaluation and what the impact [Read more...]

 

 Standard Podcast [6:23m]
Play Now | Play in Popup | Download

For several months now, I have run with the view for a devaluation of the Baltic and Bulgarian currencies. The core scenario has always been that such a move would likely not take place until end-2009/early 2010, but today we got a taste of just how acute the risks are of a much quicker and [Read more...]