Quote:
Originally Posted by lowglider
They could, but this way they wouldn`t become cheaper and thus have more exports which would boost their economy.
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Sure, but if they wanted to become cheaper, the obvious way is to lower the price :-)
Besides, we're talking about two different entities here. Say government devalues the peso so it's worth half of its previous value. Why doesn't every widget manufacturer immediately respond by doubling the price of widgets?
Not to mention that if I was an international banker loaning money to governments, I'd make sure the repayments were in dollars - or better yet, Swiss francs.