Sovereign power

In this climate of sovereign default concerns, country risk is starting to dominate currency performance, even among the G-10. In general, those countries with high debt and/or deficit ratios are increasingly being punished, while more prudent administrations with a sound track record are reaping the benefits. The effects of sovereign risk on currency performance dominate, even as other factors come into play. But these underlying factors are just part of the role credit risk is playing in