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said there were two sorts of currency crisis. The pre-1990s kind is
slow. It starts with an overvalued exchange rate, which gives rise
to a trade deficit. Foreign-exchange reserves are gradually run
down to pay for it. When they are gone, the game is up. The
currency drops. The finance minister loses his job. But life goes
on much as before. The world does not collapse.
Economist.com/blogs/buttonwood
This article appeared in the Finance and economics section of the print edition under the
headline "Keeping it real"