Belizean Dollar Weakens 4.2% Against US Dollar for the Week
The Belizean Dollar, which is officially pegged to the US Dollar at 2:1
, had in fact been gradually strengthening over the course of 2012. The USDBZD cross got as high as 1.88 in recent weeks.
The difficulty in maintaining the peg and the wild gyrations at the right edge of the chart are the result of this news tidbit (courtesy of the Financial Post):
Belize is offering bondholders 20 cents on the dollar in a debt restructuring, worse than what Argentina gave creditors following its 2001 default, according to Bank of Nova Scotia and Citigroup Inc.
What is ironic is that in the face of the debt restructuring, the currency had been strengthening. Then the recent news of the low bond offer has caused some wild fluctuations and the 4.2% drop over the past week. We unfortunately don't have a Belizean equity index we're tracking. It would be interesting to also observe how stocks are performing during this tumultuous period.