A second crucial lesson was not to lessen the currency risk for foreign lenders by attempting to peg exchange rates. Fixing the exchange rate against the dollar or the euro offered a mirage of stability. In good times, it would attract excessive inflows of foreign capital. In bad times, money would run, and in that event, it was both futile and expensive to try to maintain a dollar peg. The amount of hot money that would be mobilized by both foreign and local investors was simply too great. Better to let them exit and pay the price in losses as the local currency depreciated. If investors
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