Pursuits
Inside South America's Oil-Fueled Currency Battle
- Colombia's plunging peso is sucking commerce out of Ecuador
- Venezuela crackdown roils border as smugglers seek arbitrage
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What’s the best currency regime for an oil economy? It’s become a pressing question after the crude-price shock. In one corner of the Andes, three neighbors arrived at different answers -- and things are getting chaotic in the border areas where their mismatched systems meet.
Colombia’s free-floating peso has plunged in line with oil; Venezuela combines price controls with a pegged currency that’s way overvalued at official rates; Ecuador uses the U.S. dollar. The result is a boon for anyone who can arbitrage the differences, and a nightmare for authorities trying to stop them.