Flexible exchange rate aids those hit by commodity shock, IMF report says

Countries that allow local currency to depreciate suffer less pain, IMF says

Oil and commodities

Effects of the fall in commodity prices have been “less painful” for Latin American countries that use a flexible exchange rate, a chapter from the International Monetary Fund’s World Economic Outlook finds.

Across South America, export revenues have fallen by a third as the price of oil, metals and some agricultural products declined. However, the subsequent shocks were muted somewhat in countries that operate a flexible exchange rate as a “shock absorber”.

Using a ‘sacrifice ratio’ – the

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