Category: Argentina

The international debt markets responded enthusiastically to Argentina’s $4.2 billion bond swap that reshaped the country’s repayment schedule. The deal was a strong show of investor support and could revive the economy.

Investor attitudes toward Latin American sovereign bonds have done an about face as Argentina stabilizes its
finances and US interest rates fall. As a result, piles of cash have poured into Latin government bonds

Multilateral creditors recently gave Argentina a $39.7 billion aid package to keep the country afloat. The deal?s terms are sweet and the country still has believers, but President Fernando de la Rúa has all but lost support.

Critics say Argentina’s problems are due to its fixed exchange rate and the economic effect of pegging the peso to the dollar. Steve H. Hanke, professor of applied economics at the Johns Hopkins University, chairman of the Friedburg Mercantile Group, Inc. in New York and the leading theoretician on dollarization, firmly believes that dollarizing is the best cure for Latin American economies. But without complementary – and somewhat radical – fiscal and banking reforms, Hanke says countries will fail to get a bang for their buck.