Nouriel Roubini, an economics professor at New York University, has just joined the ranks of those who think the Baltic states should devalue.
Baltics, Bulgaria next for devaluation, said yesterday’s headlines. Here are some quotes:
“If fundamentals are out of line you cannot maintain a fixed exchange rate, you’re going to eventually have a currency crisis,”
“The Baltics are under pressure and Bulgaria’s currency board is under pressure.”
Given the economic conditions are getting worse, these pegs are under severe pressure and you have the beginning of a currency crisis,”
“The IMF made a mistake with the Latvia program of allowing them to keep the peg as it doesn’t make any sense because the currency is overvalued,”
Now this is quite serious. If you don’t know who Roubini is, you should check one of my earlier entries. I am afraid Roubini’s word is going to carry a lot of weight with the international financial community. I guess the first test is whether Parex suceeds in its bid to rollover 80% of its syndicated debt to 2010-2012…