Which of the following is an example of a failed currency peg?

The example of a failed currency peg among the provided options is the Argentine peso to the US dollar in 2001. This case demonstrates how an attempt to maintain a fixed exchange rate can lead to significant economic turmoil when the underlying economic conditions are not supportive of such a peg.

In Argentina's situation during 2001, the government had linked the peso to the dollar at a one-to-one rate, intending to stabilize the economy and curb hyperinflation. However, this peg became unsustainable due to mounting fiscal deficits, a lack of competitiveness in exports, and an erosion of foreign reserves. As economic conditions worsened, the Argentine government ultimately abandoned the currency peg, leading to a rapid depreciation of the peso and a severe economic crisis.

In contrast, the Hong Kong dollar's peg to the U.S. dollar has been maintained successfully since 1983, demonstrating robustness despite fluctuations in the global economy. The Brazilian real and Mexican peso pegs were also managed in a manner that, while challenging, did not result in a complete abandonment like that of the Argentine peso in 2001. Thus, understanding the dynamics of currency pegs highlights how critical economic fundamentals are to their success, and the Argentine case serves as a cautionary tale of a failed peg