Ecuador abandons fixed exchange rate
Saturday 13 February 1999
The Ecuadorean sucre tumbled almost 20 per cent after the central bank said it would stop maintaining fixed trading bands against the dollar.
Speaking at a press conference in Quito, Luis Jacome, head of the central bank, said the authorities would still intervene in the currency markets if the sucre came under speculative attack. According to Mr Jacome, the devaluation will help preserve Ecuador's dwindling foreign currency reserves.
The central bank has spent close to $200m over the last month attempting to defend the sucre, and also hiked short -term interest rates to more than 100 per cent. The interest rate increases crippled economic growth, and precipitated the closure of several banks.
"What they [were] doing with the exchange rate is suicidal," said Michael Henry, an economist at ING Barings, speaking before the devaluation.
Ecuador's central bank chief argued that the devaluation should allow interest rates to fall, although analysts said that the experience of Brazil - where rates are still high - suggested this may not be the case.
Analysts were also sceptical of Mr Jacome's claim that devaluation would not jeopardise attempts to bring down inflation - running at over 40 per cent.
Yesterday's devaluation follows the resignation on Thursday of Ecuador's finance minister, Fidel Jaramillo.
- 1 BBC told new political editor must be 'impartial' with Nick Robinson reportedly stepping down
- 2 Number of young homeless people in Britain is 'more than three times the official figures'
- 3 The map showing the most dangerous tourist destinations in Europe, according to the Foreign Office
- 4 The biggest first date turnoff has been revealed
- 5 German man found living with 300 rats in tiny apartment
BBC told new political editor must be 'impartial' with Nick Robinson reportedly stepping down
Humans of New York image of crying gay teen receives best response yet from Ellen DeGeneres
Isis propaganda video shows 25 Syrian soldiers executed by teenage militants in Palmyra
Number of young homeless people in Britain is 'more than three times the official figures'
Budget 2015: George Osborne to axe subsidies for higher income earners in social housing
More Britons believe that multiculturalism makes the country worse - not better, says poll
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
'I wish the BBC would stop calling it Islamic State' – David Cameron unleashes frustration at broadcaster
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
iJobs Money & Business
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...
£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...