Argentina defaulted on its debt of one hundred and forty one billion dollars to the United States; this caused the peso to depreciate in value. It then forced banks to convert U.S. dollar deposits into cheap pesos, impoverishing millions.
The Government tired to stabilize the economy by achieving a zero deficit to help restore it, but this also did not help the economy in Argentina. Argentina had many more problems so the zero deficits were not efficient enough to pull them out of the economy problems they had. With the peso's peg being abandoned in January 2002, this meant the peso had to float, so in February the peso begin to float. All this actually hurt the economy more making the exchange rate plunged and inflation pi