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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Paul Berliner who wrote (1700)	5/26/1999 8:03:00 PM
From: Henry Volquardsen	Read Replies (4) \| Respond to of 3536

Dollarization is double-edged sword for commodity producing nations like Argentina and Brazil. hmmmm. why do you think so? I would think that since most commodities are priced in dollars for international trade that dollarization would be easier for commodity producing nations.

To: Paul Berliner who wrote (1700)	5/27/1999 9:19:00 AM
From: X Y Zebra	Respond to of 3536

Dollarization is double-edged sword for commodity producing nations like Argentina and Brazil. It would go over better in a place like Hong Kong. Not only would it be beneficial for the savings of the middle class, AND the commodity producers, it would also be beneficial for business planning purposes, because at least it would reduce, (if not eliminate), the risk of currency fluctuations. Asset pricing would then be based on the economics of the enterprise, eliminating the forex risk. Admittedly, whatever business/asset we are talking about, would still be exposed to local laws, taxes, import/export duties as a result of the local government discipline or lack of the same. The main purpose, (and benefit), the way I see it is that it forces the government to be more disciplined. The value of the currency traded becomes a known risk... this takes even larger benefits if the main trading partner is the US... as it is the case in many of the Latin American countries... I admit that it also becomes a risk of over-dependency in a single or major "client" However, I may be missing something.... please point it out, I could be looking at this from a point of view of "practicalities", not specific technical principles.