Recall the Application about the causes of the Argentinean financial crisis to answer the following question(s). During the late 1980s, Argentina suffered from hyperinflation. As part of its financial reforms, Argentina pegged its currency to the U.S. dollar, making pesos "convertible" into dollars. The financial and other institutional reforms worked well in the early 1990s, but then problems developed. As the dollar appreciated sharply on world markets after 1995, Argentina began to suffer from a large trade deficit because its currency was pegged to the dollar. Then in 1999, Brazil devalued its currency, putting additional pressure on neighboring Argentina. Eventually, Argentina was forced to default on its international debt in 2002 and freeze bank accounts, and a severe depression ensued.
-According to this Application, because Argentina pegged its currency to the U.S. dollar, the appreciation of the dollar caused a large trade deficit in Argentina. This trade deficit meant that

Question

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When a country experiences a large trade deficit, it means that it is importing more than it is exporting. This situation increases the supply of the domestic currency (in this case, Argentinean pesos) in the foreign exchange market as importers exchange pesos for foreign currencies (like the U.S. dollar) to pay for imports. Consequently, the supply of pesos exceeds the demand for them.

Recall the Application About the Causes of the Argentinean Financial