Question: What effect does a deterioration in a country's terms of trade have on its ability to service its external debt obligations? What effect does a devaluation or depreciation of a country's currency have on its ability to service its external debt obligations? If you can, use some simple numerical calculations to show these effects. (For example, when the value of the Mexican peso fell from roughly 3 pesos:US $1 to 6 pesos:US $1 in early 1995, did this depreciation make repayment of Mexico's debt easier or more difficult? Were more or fewer exports, in physical terms, required for a fixed amount of debt service?)