2. Which foreign exchange regime would you prefer to see in Argentina if you wer

Question

2. Which foreign exchange regime would you prefer to see in Argentina if you were a U.S. exporter of heavy machinery? A European exporter of cosmetics? A Brazilian exporter of automobiles? Why? 3. What problems related to regional integration agree- ments are illustrated in this case? Sources: David Wessel and Craig Torres, "Passing the Buck," Wall Street Journal, January 18, 1999, p. A1; Craig Torres and Matt Mof- et, "Neighbor-Bashing," Wall Street Journal, May 2, 2000, p. A1; .S. Department of State, FY 2000 Country Commercial Guides: rgentina and Brazil; and Michelle Wallin, "Analysts Warn That a ee-Floating Peso Is Only Part of the Fix That Argentina Needs, all Street Journal, February 8, 2002, p. A16.

Explanation / Answer

If I were the exporter of heavy machinery from United States then I would definitely have preferred dollarization because of the easy compatibility in exchange. As the value of Dollar is definitely going up, this type of approach would have provided me better exchange rates in my market by exporting the heavy machinery to Argentina where intensive profits can be on.
For a European exporter of cosmetics in Argentina I would have chosen the status quo because of the better opportunities using this type of approach. Europe is very well known for creating high quality cosmetic products where maintaining Status quo would have provided competitive advantage over the current stating cosmetic industry in Argentina and improve the overall availability of options for the company in operative region.
Again dollarization would have been the best option for a Brazilian exporter of automobiles as automobiles usually have big money investment which could lead to better benefits as the dollar exchange rates are relatively higher than currency of Argentina. Best type of approach would have provided better profits to the automobile exporter by choosing dollarization and implementing the same in market of Argentina.

Ticket availability of currency as well as high exchange rates are the main problems in the regional integration illustrated in this is specific case. Where high rate of job turnover and availability of less job opportunities for the people of Argentina is creating financial inability. Exporters are facing less revenues from the market as the overall rate of Argentinian currency exchange is relatively very low as compared to the dollar. All of these factors provide an understanding of using dollar as a main tool for improving profit for the exporters in Argentina and providing better market sales support.

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