Pegged Exchange Rates The United States, Argentina, and Canada commonly engage in international trade with each other. All the products traded can easily be produced in all three countries. The traded products are always invoiced in the exporting country’s currency. Assume that Argentina decides to peg its currency (called the peso) to the U.S. dollar and the exchange rate will remain fixed. Assume that the Canadian dollar appreciates substantially against the U.S. dollar during the next year.
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