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.
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