On February 21 2021, Chloe Cornish from the Financial Times reported on Lebanon that: Hunger threatens to
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Question:
On February 21 2021, Chloe Cornish from the Financial Times reported on Lebanon that:
"Hunger threatens to ignite unrest as dollar peg slips and inflation soars in heavily import-dependent country" "The [Lebanese] pound has been pegged at roughly 1,500 to the dollar since 1997"
In the case above the Lebanese pound was overvalued. The abandonment of the peg by the Lebanese central bank led to a strong weakening (depreciation) of the currency. Discuss whether it is likely that the opposite can happen to a country. That is, discuss whether it is likely that a country can be forced to abandon it's peg if its currency is undervalued, leading to a big appreciation of the local currency.
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