And already, because of inflation in Brazil and price deflation in Argentina, the real exchange rate between them is close to its pre-devaluation level.

ECONOMIST: Another president caught in Argentina’s economic trap | The

Between 1984 and 1988 the average annual rate of inflation was 14.5%, of devaluation 14.3% and of economic growth 3.2%.

ECONOMIST: International rescue

But his government's handling of this month's devaluation of the peso, and its adoption of a dual exchange rate (temporarily, it says), have added new snags.

ECONOMIST: Argentina's crisis

And if a devaluation cannot be used to reduce real wages, the real exchange rate overvaluation will be undone via a slow and painful process of wage and price deflation.

FORBES: Friedman and Roubini on the Euro Breakup

Indeed, a forced devaluation may do much more harm to investor confidence than continuous exchange-rate fluctuations.

ECONOMIST: Exchange rates

With a fixed and overvalued exchange rate, Chavez will rely on tough spending cuts (after a pre-election bonanza) and devaluation, which would act as a de facto tax hike.

FORBES: What Chavez's Reelection In Venezuela Means For Global Oil Markets