Latin America Braces for Currency Wars

Latin American policymakers are reportedly preparing for what could become a new currency war, as hot money flows out of Japan following its open-ended bond-buying program, according to a recent article in Reuters. Stronger currencies in the region could hurt exports and ultimately increase unemployment, if left unchecked and Japan stays its course.

One of the more surprising examples of potential monetary policy action comes from Mexico, which has taken a hands-off approach to its currency, after the Black Peso Crisis. But, the quantitative easing occurring throughout the developed world has put many of these economies in a unique position that may necessitate action.