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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Earlie who wrote (241007)5/16/2003 6:59:51 AM
From: zonder  Read Replies (4) of 436258
 
Sorry if it was unclear - Very simply, that devaluation of the currency does not mean immediately higher prices. That "a 2:1 split of USD" may not mean "double prices" for a long time.

Example: 40% overnight devaluation. Most of the population still makes the same money (salaries) in local currency. Producers cannot increase prices by 40%, no matter how much more expensive their imported raw materials are now.

In some countries with high currency devaluation, it takes years for the inflation to catch up. Or conversely, a currency may appreciate for years before devaluation catches up. All I was saying was that betting the devaluation of your currency will mean proportionately high prices might not be a profitable gamble, for the adjustment can take a very long time.
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