Developing countries borrow in international credit markets

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Reference no: EM131392023

When developing countries borrow in international credit markets, many find that they must borrow in currencies other than their own (such as dollars, yen, or euros). Why are international creditors willing to make loans in dollars, yen, or euros but not in the developing countries' currencies?

A. Lenders are not well-informed about developing countries' economic situations.

B. Lenders believe that developing country currencies will always appreciate.

C. Lenders receive higher interest rates on loans in dollars, yen, or euros than on loans made in developing countries' currencies.

D. Lenders believe that developing countries have a history of weak macroeconomic management and imprudent monetary and fiscal policies.

Reference no: EM131392023

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