Argentina's notoriously intransigent unions were always likely to make it harder to get good results from a fixed currency.
At this time the system of fixed currency rates established under the Bretton Woods agreement of 1944 was in disarray.
Now that Argentina has abandoned its fixed currency, officials from both countries are enthusing about the possibilities for reviving Mercosur, and maybe even for a common currency.
In the long term, fixed currency rates were a recipe for trouble because when economic times changed currencies, conversion rates needed to change as well to keep the economy in equilibrium.
Free capital movement and pegged exchange rates are a dangerous mix (unless the currency is fixed under a currency-board arrangement as in Hong Kong, where all local currency must be fully backed by American dollars).
"We definitely take the intervention risk into account when investing in a currency, " says Dagmar Dvorak, director of fixed income and currency at Barings.
Before Bosnian officials fixed the national currency against the euro in 2002, they used the Deutsche mark as the peg.
Mr Goldstein's boss, Hans-Peter Bauer, who was in charge of fixed income, currency and derivatives trading, went by the wayside just before Christmas.
Leaving the one-off gains aside, Bank of America's income from mortgages and income from trading in the fixed income, currency and commodities markets were both lower.
At Goldman Sachs, BofA and Citigroup, revenues from fixed income, currency and commodity trading, the main contributors to investment-banking profits over the past decade, were up to a third lower than a year ago.
And a more serious drawback, seen in Thailand, is that by appearing to eliminate currency risk a fixed rate encourages firms and banks to borrow heavily in foreign currency at cheaper interest rates than on domestic funds.
"I think Wednesday we don't have a choice, " particularly if fixed-income and currency markets are open.
By year-end it aims to put most of its 17 fixed-income, currency and commodity product lines on Web ET.
All three countries have fixed exchange rates (currency boards in Estonia and Lithuania, a currency peg in Latvia) fully backed by foreign-currency reserves.
On January 1st 1999 the currencies of 11 countries were fixed against a new currency, the euro, which became the unit of reckoning in wholesale financial markets.
Yet Argentina's experience provides clear evidence that even currency boards, where the rate is fixed by law, and where the domestic currency has to be backed by hard-currency reserves, are not immune from crises.
He announced a series of currency controls and fixed the exchange rate against the dollar (see article).
Curtis Mewbourne, who trades currency and manages fixed-income portfolios for Pimco, argues that asking other countries to give up their currencies in favor of the dominant U.S. dollar is just asking too much.
Like other fixed exchange-rate systems, currency boards prevent governments from setting their own interest rates.
In the case of a gold standard system, the policy target is to create a currency whose value is fixed to gold.
Next year Mexico's economy will be much more strongly placed than it was in 1994, with less debt falling due, a smaller current-account deficit, and a floating currency instead of a fixed one.
Under the classical gold-coin standard (1717-1914) private banks and central banks alike issued currency convertible into a fixed weight of gold, with balance sheets consisting primarily of gold coins and short-term loans denominated in local (but gold-convertible) money.
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The crises of the 1990s did, however, tend to have one thing in common: they all had some kind of fixed exchange rate, often a fixed peg or link to another currency, usually the dollar, or an exchange-rate band, again usually linked to the dollar.
Another possibility is to announce that the currency will no longer be fixed at a specific rate.
Under the old gold standard system, a currency could be converted into fixed amounts of gold and vice versa.
What brought Argentina down was the combination of its fixed exchange rate, which made its currency uncompetitive, with persistent fiscal deficits.
Like any fixed exchange-rate system, a currency board offers the prospect of a stable exchange rate, which can promote both trade and investment.
Fixed income fund managers piled into local currency debt of the big emerging markets for the third straight week, according to fund trackers at EPFR Global in Cambridge, Mass.
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ETPs are now available for a wide range of equity asset classes, sub-classes, styles and sectors as well as fixed-income, commodity and foreign currency categories on a long and short basis.
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