A Strong Peso Is Just What Mexico Doesn't NeedRudi Dornbusch
The Mexican economic debacle is nearing its first-year anniversary. Political turmoil in an election year combined with an overvalued peso translated into one of the more spectacular currency crashes in monetary history. Ineptness of borrowers and lenders alike sent the peso crashing, and it has not really stopped crashing even now. The value of the currency has more than halved, now hovering at approximately 7.5 pesos to the dollar compared with about 3 pesos last year before the crisis. Gross domestic product is down more than 6%, and politics is more charged than ever.
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