argentinian peso currency money banknotes Leo La Valle/AFP/Getty Images

Decoding Currency Crises

Brazil invests little and is running a fiscal deficit of 9% of GDP, whereas Argentina invests more and is gradually consolidating its public finances. So why is Argentina the one that's in trouble with the currency markets?

SANTIAGO – Imagine two countries. Country A has a fiscal deficit of slightly over 5% of GDP, while country B shows a gaping hole of nearly 9%. Moreover, until recently A’s public debt barely exceeded 50% of GDP, while B’s public debt has been shooting up and will soon reach 90% of domestic output.