Peru, dollars, and China

Word has come through that Peru is talking about swapping out its local currency for dollars amidst negotiations for a major loan. But the most interesting aspect of this economic news is that the Peruvian government is talking to the United States and China.

The Peruvian Finance Minister, Luis Valdivieso, said Peru is looking for some US$ 9 billion in loans to help finance some $35 billion in development projects.

Considering the change of the Presidential guard next week and other issues around the world, the US might stall - or prolong - the negotiations in the face of increasingly drastic Peruvian need. It will be interesting to see if China bails out Peru, with a long-term strategic look at what Peru has to offer in return, apart from repaying the loan and what Garcia has already given China by way of mining concessions...