The writer is chief executive of a geopolitical risk advisory firm and a former foreign minister of Panama
In December 1994, Mexico’s peso collapsed and took Latin America with it. The mechanism was simple: governments had borrowed in dollars they could not print, and when the currency cracked, the debt became unpayable overnight.
Economists called it “original sin”: the inability to borrow in their own currency. For three decades, it defined Latin American bonds as a trade you got out of, not into. Then the Strait of Hormuz effectively closed with the Iran war. And the region’s bonds mostly did not flinch.
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