The Currency Wars Reach Latin America

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By Camille Mendoza

Whether or not it wants to be, Latin America is now officially included in the global currency war. This past week, Peru's new sol fell 0.4% to 3.015 per USD hitting its lowest point in six years. Bloomberg Businessweek writer John Quigley argues these sudden cuts are a consequence of a low demand for copper, which accounts for almost a quarter of Peru's exports. While Peru is purposefully signed on to the currency war, other countries like Brazil have become casualties. In a Bloomberg report of 31 countries, the Brazilian real decreased the most since the beginning of the year, weakening 2.8% to 2.679 per USD. This happened after Moody's Investors Service, a bond credit rating business, cut state-owned Petróleo Brasileiro SA's credit rating to junk status due to corruption allegations. The currency war has engulfed the entire region, and while Brazil will have its chance to bounce back from the battle, Peru will be able to further engage in the war…if it dares.

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