ASSIGNMENT ON CASE STUDY

OF HSBC AND THE PESO CRISIS IN ARGENTINA

COURSE TITLE: INTERNATIONAL BUSINESS

COURSE CODE: BUS 231

PREPARED FOR:

Dewan Md. Nur A Yazdani

Lecturer, Faculty of Business

ASA University Bangladesh

PREPARED BY:

Mostafizur Rahman 071-12-422

Abu MD. Zakaria 071-12-454

Foyad Hossain Khan 071-12-452

DATE OF SUBMISSION

MARCH 23, 2009

1. What are the major factors that caused peso to fall in value against dollar?

Answer: the major factors that caused peso to fall in value against dollar have been given

below,

Commodity prices declined

U.S. dollar strengthened against other currencies.

Main trading partner Brazil devalued its currency.

Cost of capital increased.

2. What should president Duhalde do to stabilize Argentina’s currency?

Answer: Argentina’s president Duhalde can possibly do these things,

Implement a strong monetary policy.

Make the central bank more powerful and effective.

Can go with “full dollarization”

Can get financial suggestion from the IMF(International Monetary Fund)

3. What are HSBCs options in Argentina, and what do you think they should do?

Answer: It is apparent that HSBC is controlling neither money market nor the fiscal

policy. They are just doing business and becoming the victims of situation. So they have

two options left,

i. To wait and see if any international help can help out the

Argentine collapsed economy.(as well as conceding loss)

ii. Get out from there.

I think as a very volatile and collapsed economy HSBC should no longer concede loss.

Because it doesn’t seem that the overall situation is going to be good in a short time. So I

think that they should get out from there.