Fragile Economies And Floating Currencies Don't Mix

Monetary turmoil has rocked the economies of several rapidly growing Asian nations since Thailand devalued the baht in early July. These events dramatically focused attention on the systems used by developing countries to determine the international values of their currencies. Free-floating exchange rates provide the greatest flexibility in adjusting to changing economic circumstances, yet I believe most developing countries should instead choose to tie the value of their local currencies to the dollar, mark, or yen.

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