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Currencies are crashing. It’s happening in enough developing countries that economists and financiers are worrying about a problem what may include developed countries. (Good luck finding a good definition of which countries are developing versus developed.) For a variety of reasons several currencies are dropping at rates that aren’t academic. Their citizens are having problems. India (-10%) and Indonesia (-8%) just had their worst recent declines. Argentina is down 52%, and an interest rate hike to 60% hasn’t stopped the plunge. Turkey is down 42% and is refusing to follow conventional economic wisdom to turn it around, which is why it is expected to continue dropping. And then there’s Venezuela with inflation expected to surpass 1,000,000% this year. It is easy to discount the news because their currencies aren’t the US Dollar or the Euro; but these are large countries. A trade war probably isn’t going to help. They may be happening for a variety of reasons, but they may combine to have a common and negative impact on the global economy. Happening at the same time as a recovery hits new records for longevity is actually worrisome too, because recoveries typically end with at least slight recessions. The combination may be dramatic.

One thought on “Developing Currency Crises

  1. Pingback: Data That Matters September 2018 | Pretending Not To Panic

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