Feb 27th 2013 9:00am est
Nobody was really shocked when Venezuela devalued the bolivar earlier this month from 4.3 to the dollar to 6.3. When it comes to the currency wars, massive devaluations are simply one of the keys to this “race to the bottom” strategy.
But Venezuela’s bad behavior, and that of several other countries in the region, means that several Latin American countries are now likely to suffer hyper-inflation or declare bankruptcy. For investors in Latin America, that raises the risks for everyone, even for countries with good policies and relatively low debt.
Unfortunately, long-standing investors in this part of the world have seen this hyper inflationary pattern before.