Currency wars: Pressure point
Latin officials are struggling with the fallout of capital inflows in an era of easy money. The risk of financial instability may be growing
By Taimur Ahmad and Katie Llanos-Small
When finance ministers of the Group of 20 nations gathered in
Moscow in February, exchange rates topped their agenda.
Officials sought to ease mounting fears that the
world’s biggest economies are locked in a race to
the bottom to devalue their currencies.
"We will not target our exchange rates for competitive
purposes," the G20 ministers said in a communiqué after
their summit. "We will resist all forms of protectionism and
keep our markets open."
Within days of their statement, the G20’s wish
for a shift in financial market perceptions appeared suddenly
– and alarmingly – to have come true. For the
first time in months, investors turned sharply from speculating
on an outbreak of so-called currency wars to worrying anew
about financial crisis in the eurozone, as a fresh bout of
political turmoil took hold in Italy.
Risky assets – including emerging market
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