Enduring a troublesome economic slump, South American countries are finding that the value of their currency is steadily dropping. In countries like Argentina, Brazil, and Venezuela the currency of the three Latin countries are falling in comparison to the United States after the latter’s value reached a low level during the financial crisis of 2008.
The Brazilian real is one of three currencies that have devalued significantly. Authorities in Brazil announced a $60 billion program initiative that will try and stop the fall of the real’s value. The effort is similar to the one made by both Indonesia and Turkey when their respective currency value dropped.
The move made by Brazil shows the South American region’s effort to try and change the tide of the economic threat that the region may soon face.
“We are in the midst of a significant rebalancing, and the growth outlook for emerging market countries has deteriorated,” said Jens Nordvig, a currency strategist at Nomura—a financial holdings group focused on the investment and financial services business operations—in an interview with the New York Times.
In Venezuela the value of the bolivar has also devalued substantially like the Brazilian real. The bolivar’s value struggled while under the presidency of the country’s now deceased President Hugo Chávez. After Chávez’s death the bolivar dropped 32%.
According to The International Monetary Fund—an organization consisting of 188 countries that work together to enable a global monetary cooperation, secure financial stability, promote high employment and sustainable economic growth while reducing poverty around the world—said that Venezuela’s economy is expected to contract a 0.1% this year which is a difference from the 5.5% growth they saw in 2012.
Due to the economic atmosphere in the country Venezuela is expected to have the highest inflation in the region at 27% which inevitably force the country to make cutbacks in spending money in the public sector. A form of spending that was a pivotal reason Chávez was seen as a favorable president in the country by most.
In the past 15 years, Argentina has endured an economy that has been what some may call a “roller coaster ride.” The value in the country’s peso has a rate of devalue reach 30% last year. The rate of the peso exceeds the traditional inflation norm at 23%.
The value of the U.S. dollar is seeing a rise raising 43% over the last two years; with 19% of the increase occurring just over the past six months. Compared against Latin American countries the dollar has risen 9% in comparison to the Colombian peso, 7.8% contrast to the Peruvian sol, and 6.7% compared to the Chilean peso.
As an economic hiccup spreads across the world, the only thing that could possibly change the tide is by the initiation of legislation that will see changes to the way the economy has been currently handled. Governments should move forth with the passage of time rather than cling to the old ways of the pass.
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