Markets can punish these attempts to manage currency values in many ways. The most important is that if a country has borrowed heavily in dollars or euros or some other foreign currency, then devaluing its own currency by, say, 30 percent is going to raise its payments on those foreign loans by an equal margin. One of the more persistent questions about the global economy in 2015 was why so many emerging countries, including Brazil, Russia, and Turkey, had gained so little from the recent decline in the value of their currencies. The answer was that they had not fallen far enough to feel
...more
