Political Risk Latin America Blog @PolRiskLatam

Why the Fed is popular in Ecuador

Posted in News and Articles, Political Risk by politicalrisklatam on October 22, 2010

by Henry Mance for Financial Times, October 22nd, 2010.

Some emerging markets are furious with US Federal Reserve, which they accuse of irresponsibly weakening the US dollar. But the Fed also has an unlikely fan: Ecuador’s left-wing president Rafael Correa. Correa, who has a PhD in economics and recently survived a police uprising, this week said quantitative easing policies “have been convenient” for his country.

That’s because Ecuador is in a rare position. Ten years ago, it replaced its local currency with the dollar to avoid hyperinflation. Today’s weak dollar, Correa argues, helps the country compete with South American neighbours, which export similar products but have rapidly-appreciating currencies. (continue reading… )

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