Question

4. The Argentinian peso has been steadily depreciating against the US dollar, but the government wishes to stop the depreciation. What must the Banco Central De La Republica Argentina do to stabilize the exchange rate? Is there a limit to how much it can intervene in the foreign exchange markets?

Answer 1

a.Argentina must sell some of the foreign exchange assets and try purchasing their own currency from foreigners.

They can try manage or reduce inflation

b. There is no limit to a country's intervention on the foreign exchange markets, it can buy and sell foreign currency as much as it wants.

Step-by-step explanation: