Latin America has a long history of crises involving wrenching devaluations, hyperinflation, or both. No-one knows this better than Latin Americans themselves; they generally keep savings of any magnitude safely offshore in dollars. If you're looking to buy a house in the region, chances are it will be priced in dollars; if you're a bank looking to attract local-currency deposits, you'll have to pay a large premium over local dollar interest rates.
Even as the price of credit risk has declined dramatically over the past few years, currency risk has remained relatively expensive.
But 2005 looks as if it will be the year when Latin America finally attained a global currency of its very own: the Mexican peso.
Replacements
Looked at from a historical perspective, the Mexican peso is not the kind of instrument...
