Worldwide currency devaluation places downward pressure on yield curves, remarks Clough.
"Currency devaluation and recessive pressures brought about inflation and a strong reduction of tax revenue, leading to restrictions on public finance," she said.
A debt default, even through restructuring, or a devaluation, would exert intense pressure on other emerging markets.
The optimists say no, arguing that inflation could peak later this year, the government's measures could restore lending and imports to sensible levels and a moderate devaluation could relieve the pressure on the dong.
They resisted pressure for devaluation and defended their currencies by allowing interest rates to climb.
Predicted price rises for fuel will coincide with strong pressure for a devaluation of the currency, a toxic mix that has frightened off previous governments.
China because, to relief all round, it has managed so far to stave off pressure for a devaluation of the yuan, which would destabilise other currencies while getting in a few uncomradely digs at Japan for not doing more to pull the region out of recession.
Moreover, some foreign observers argue that deflationary pressures will make devaluation irresistible, for lower export prices would help combat them.
Some economists worry this could spill over to other Asian countries where inflation is also reaching alarming levels.The central bank has announced a 2% devaluation, hoping to relieve the pressures on the currency.
During Valencia's first year in office internal political pressures led to devaluation of the peso (Colombia's currency), wage increases among unionized workers of some 40 percent, and the most rampant inflation since 1905.
