Latin America Dollar Pegs
Boz points out the dollar pegs in Latin America, and how self-proclaimed anti-imperialist governments employ them just as much as governments with closer ties to the U.S. You don't hear much about Bolivia, for example, which uses a crawling peg, as does Colombia.
As with so many other things in Latin America, including presidential approval and support for market economies, there is no clear correlation to ideology. Presidents who rail publicly against capitalism work perfectly well with it privately. Boz notes Bolivia, where Evo Morales talks tough but appointed a conservative finance minister.
Yet in the United States we so often insist on viewing Latin America through a simplistic ideological lens. This view makes the incorrect assumption that ALBA countries are necessarily hostile to the United States and even to capitalism more generally. This mistakes rhetoric for reality. Some are, some aren't, and even that changes over time.
4 comments:
Does Colombia still have a shadow peg? I never heard about one when I was living in Medellin last year, and the recent 25% drop in the COP with oil seems like outside the range a controlled band would usually permit.
GTQ and CRC seem to be more or less pegged, and obviously Ecuador (leftist) and Panama (more to the right) are either dollar users or straight 1:1 pegged.
Eh, just read the linked post, and I disagree with that. In that the dollar pegs are fictitious in Argentina, Cuba, and Venezuela. The governments only "maintain" them to put off the inevitable, steep devaluations in their base currency. Any one who has noticed the difference between the street rate and the official rates in these countries knows what I'm talking about.
Sure they could fake "peg" to the Euro, Swiss Franc, Chinese Yuan or whatever to make a political point but when their paper devalues by 25, 50% or more annually, who cares what hard currency it is "pegged" against in a fantasy exchange rate that doesn't exist to actual open marketplace.
Bolivia and Ecuador count as leftists validating the dollar, given that you can readily use dollars in either country, or exchange dollars at the official peg rate without getting ripped off.
I think there's an interesting subject here, but simply saying hey it's interesting Argentina and Bolivia peg to US isn't all that informative when the street exchange rate isn't in the same hemisphere as the government-desired rate.
Hmm, I had Colombia stuck in my mind but now I am not sure, and now I see it is not listed. If not, that makes it even more interesting because it is actually one less govt close to the US to do so.
GTQ and CRC seem to be more or less pegged,
I believe Guatemala is. Costa Rica dropped its peg (which was more of a wide band) about two weeks ago, but it didn't have much impact in the market.
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