They call it “green fever.” As the peso loses value against the dollar, Argentines panic. Suddenly, everyone is an economist, tracking the exchange rate like the score in a World Cup match. In some ways, that angst is understandable, as vivid memories of economic chaos have left the impression that Argentina is forever on the verge of collapse.
In good times, that sentiment merely stunts growth by discouraging investment. But in moments of financial stress, Argentina’s reputation deprives its leadership of an indispensable resource: the benefit of the doubt. The rush to the exits reinforces doubts, raising borrowing costs and bludgeoning the peso.