Overcoming the Currency Deterrent

Overcoming the Currency Deterrent


Political risk insurance has been around since the 1960s but until now there was little investors could do to protect themselves against currency devaluation. Political instability is less of a problem than it was 40 years ago, but currencies have become more volatile. Brazil's real lost 30% of its value during the January 1999 financial crisis when the government could no longer defend the currency and had to allow it to float. Overseas Private Investment Corporation (OPIC), a US government organization, and Bank of America have developed a product to address this problem. In May, they arranged the first bond issue to cover currency devaluation for a Latin American company. The deal w

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