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Over the past four decades, every developing country currency crisis — including Mexico (1982 and 1994), East Asia (1997), Russia (1998), Brazil (1999), Argentina (2002 and 2018), Turkey (2018), Lebanon (2019) and Zambia (2020) — arose because of a loss of monetary sovereignty after the accumulation of foreign currency loans or futile attempts to defend a currency peg.

The first of these currency crises was probably the worst. After Mexico defaulted on its debt in 1982 as a result of soaring interest rates in the US, the crisis spread to more than 40 developing countries in Latin America and Africa, which had also taken dollar-denominated loans. In Latin America, the crisis resulted in a lost decade — La Década Perdida. José Antonio Ocampo, a Columbia University economics professor says the crisis was “the most traumatic event in Latin American history”...

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