Argentina went from robust to bust in a matter of months, leaving investors scratching their heads. Among the mysteries: why the country’s record hoard of currency reserves—often seen as shield against foreign-exchange volatility—did so little to stem the crisis.

The lesson seems to be that loads of dollar reserves alone can’t make up for weakness in a country’s economic underpinnings. Foreign investors who had been burned by Argentina’s repeated defaults over the years, reassured by the country’s rising reserve bulwark, edged... ...

Read more from our friends at Gold & Silver

Pin It