Panama’s currency, the lari, has lost half its value, raising concerns among investors that the country could plunge into a global recession.
The peso depreciated as much as 2.1% on Thursday, marking the first drop since July 2014, when it fell below a level of around 25 to the dollar.
The currency is seen as one of the most volatile in the world, but is still the most commonly traded foreign currency.
It traded at about 70 to the U.S. dollar on Thursday morning.
The currency devaluation comes as China’s currency has also been hammered by the country’s trade dispute with Panama over a trade agreement.
The two countries have been locked in a standoff since December over the Panamanian government’s support for a controversial $500 million mining project in the disputed South American nation.
China and Panama are locked in an economic war over their contested South American mineral resources.
In the past, Panama has used its foreign currency reserves to prop up its economy.
The move will add to pressure on China, which has been pressing Washington to ease economic restrictions in exchange for the Panamax deal.
Panama has not had any trade agreements with the United States since 2012.
But its economy is growing.
The country’s GDP grew by 7.2% in 2015, the fastest in the region, and it’s forecast to grow by 7% in 2020.
The Central Bank of Panama is forecasting that inflation will drop to 6% this year and 6% in 2019, and the country is forecast to achieve a GDP of $11 billion this year.
The lari is not the only currency to suffer in the trade dispute.
The yuan was devalued to its lowest level in nearly two years on Thursday.
The yuan lost 0.5% against the U,S.
and Japanese currencies, the weakest performance in over two years.
The pound was down 1.4% against a basket of currencies.