Monday, February 11, 2008

How I learned to stop worrying and love the peg. 

the thing about the value of a currency is that it is difficult to extrapolate, even yearly forced devaluations on simple inflation calculations do not really solve much, there are other variables, among them our competition, the world's market is not the US in itself, there are a litany of other currencies that gain and lose value relative to the exchange rate. But year after year studies comissioned by the IMF showed that we are not the most expensive country in the region, I always scratched my head, but now I know why after visiting Brasil. The whole region is revaluating its currency.









The revaluation is most dramatic in Brasil, Chile and Colombia even if their inflation is lower, it should never justify this.

For whatever fault CADIVI has we can at least rest easy knowing the fact that we are pegged to a sinking currency, and even more thankfull that we are not revaluating it like the rest of our competitors.


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