Thursday, October 08, 2009

The Perils Of A Baltic Devaluation

The Economist has an interesting story about how a hypythetical devaluation would dramatically increase the Baltic debt burden, as most mortgages in particularly Latvia and Estonia are denominated in foreign currencies (euros or swiss francs). The same goes for much non-mortgage debt, including government debt. As a result, the case for a weaker currency is far weaker than in other countries. A more general discussion of the devaluation issue can be found here.


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