Thinking Argentina or Turkey in the recent years – if the local inflation is so severe that the price of grocery in the morning vs evening (on the same day) is different, how do people make large purchases like a house or a car? How is the price determined and who would provide the long term financing?
In: Economics
Usually you pin the price to USD or EUR.
For credits/mortgages you would have variable rate interest based on inflation.
Some countries allowed making loans in USD, but in Ukraine a lot of people took low interest USD loans compared to higher interest UAH loans, and when after Russian invasion in 2014 the exchange rate spiked 200% were unable to pay them (as their salaries were in UAH but loans in USD). This caused additional strain on financial system as a lot of people defaulted on their loans, so this practice was banned.
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