The Devaluation Delusion Revisited

Put differently, even after default, pesofication' and devaluation, Argentina's pension funds yielded a very decent return in real terms.

Devaluation, indeed, remains a taboo.

Devaluation incites several restorative forces.

Devaluation and debt restructuring worked.

As the currency appreciates in real terms, exports falter and the current account deficit widens, and the government balks at devaluation.

Only devaluation restored growth to these countries.

During the 1998 financial crisis, devaluation would have hurt those who owned local real estate but had little earnings or assets in US dollars.

Even accounting for the very large peso devaluation, the US dollar rate of return varies between 2.5 and 4 per year, depending on the real exchange rate used to value the peso assets of AFJP's after the devaluation in January 2002.

America s foreign creditors would not accept a sharp reduction in their dollar assets real value that debasement of the dollar via inflation and devaluation would entail.

Eurozone membership precludes inflation and devaluation as adjustment mechanisms.

Devaluation is not an option because of the common currency.

And adjustment that is, currency devaluation was not an option.

Brazil thinks it can get by announcing that it will never devalue and nobody believes it real interest rates are 30 because devaluation is just around the corner.

Financial markets understood the impact of this and expected a devaluation.

A slight devaluation would solve any remaining problem with export demand.

One way is as part of America s strategy of competitive devaluation.

But, the devaluation was much less important than is widely assumed.

Now, however, the specter of devaluation has disappeared from northern European countries.

Greece is heading towards disorderly default and or devaluation with incalculable consequences.

Put differently, even after default, pesofication' and devaluation, Argentina's pension funds yielded a very decent return in real terms. Furthermore, they fared well relative to other classes of creditors, especially foreign bondholders.

The first major shock came with Russia's default and devaluation of August 1998.

The results were predictable the 1998 bailout did not work, but devaluation did.

China's problems won't be resolved by a devaluation of 20 or even 40 .

Anyone who believes devaluation is an answer to China's problems misses the point.

Soon after the devaluation, bank leaders, deputies, and officials held several emergency meetings.

The devaluation of the currency dealt a crippling blow to the nation's economy.

I saw real humans with real compassion.

Even if there is some loss of Chinese competitiveness, devaluation is not the answer.

Sadly, America is not alone in viewing devaluation as a panacea for domestic problems.

If we had restructured Russia's debt, there would have been a risk of devaluation.

So devaluation is unlikely to be effective in boosting the overall rate of growth.

Even China s vast reserves will not be enough to stave off a painful devaluation.

Often those who purchase dollars do so out of concern of local currency devaluation.

Our current situation does not permit us to benefit from devaluation and increase production.

This is real, tangible change, real, tangible change.

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Indeed, even with the turmoil of default and devaluation, and despite the usual 12 18 month lag in the impact of devaluation, Russia was growing at 5.4 annually by the end of 1999.

For these sectors, devaluation means an increase in costs, rather than a gain in competitiveness.