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Why the Peruvian Economy Matters to the World

Machu Picchu Peru

 

As I first began to think about this post I imagined that the line “Why the Peruvian economy matters to the world,” would be considered by some in high finance circles to be somewhat comedic relief, maybe like a night out at the improv comedy club for Keynesian economists and bankers.

It’s not to say that Peru’s economy is so large or anything like that, being just 51st in nominal GDP worldwide,  (source) but rather that its run to glory is so typical of what has happened to little countries all over the world since 2008. As the “free” Federal Reserve dollars sloshed around the planet searching for anywhere to grow faster, faster, those same dollars found a happy home in many emerging and smaller nations. Peru by itself is just one of the many, but the sum total of debt between all those “little” emerging nations is a significant sum that could easily cripple the banking system.

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Peruvian Sol Reaches S./3 vs $1 USD

Today, the Peruvian Sol fell to S./3 to the US dollar at least for bank customers. In what has been an almost daily event, the Central Bank has been selling dollars to stop the fall of the Sol.

From El Comercio (Via Bing Translator)*

The price of the dollar is appreciating in the foreign exchange market and your (the) quote already reaches the S/.3,00 on the banks of the city since this morning. On the other hand, the Bolsa Valores de Lima (BVL) (Lima Stock Exchange) record positive indices at the opening of business.

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