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Saturday, March 10

Institutional Investor - Peru after Fujimori: "In the aftermath of the Russian debt default in 1998, bad bank loans nearly tripled and loan defaults rose 40 percent. The economy is heavily dollarized, with about 80 percent of bank deposits and 85 percent of debt held in dollars. This level of de facto dollarization reduces flexibility: Slippages in the exchange rate, thought to be somewhat overvalued at the moment, would cause inflation, yet the prevalence of dollarization fuels unemployment, analysts say. "Peru is basically a dollar economy without the advantages - nobody wants to own soles and everybody wants to owe soles," says Pedro Pablo Kuczynski, CEO of the Latin America Enterprise Fund, who has joined the Toledo campaign as chief economic adviser." A very thorough article

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