Trials and tribulations of Argentina’s currency board. Using data from the International Monetary Fund and the Bank for International Settlements, chart the current (balance of both visible and invisible trade) and capital accounts of Argentina over the period 1997–2007 against the peso/dollar exchange rate. Hint: The peso was pegged to the U.S. dollar through a currency board until January 2002, when it collapsed and started to float more or less freely against the U.S. dollar.

a. Comment on how the balance of merchandise trade behaves over that period.

What is your interpretation?

b. Did the Bank of Argentina intervene heavily during that period? Can you detect a change in policy after the currency board was abandoned in 2002?