What risk does the difference between the rate

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In February 1994, Argentina's currency board was in place, and 1 peso was exchangeable into 1 dollar. The following interest rates were available:

U.S. LIBOR 90 days: 3.25%

Peso 90-day deposits: 8.99%

Dollar interest rate in Argentina, 90-day deposits: 7.10%

The latter two rates were offered by Argentine banks.

What risk does the difference between the 7.10% dollar interest and 3.25% LIBOR reflect?

What risk does the difference between the rate on 90-day pesos and 90-day dollar deposits by Argentine banks reflect?

Reference no: EM131116369

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