Economic history of Argentina rate never went above 10%, and the country largely recovered by 1935. However, the Depression permanently halted its economic expansion. Actually, much like other developing countries, the economy was already in a downturn beginning in 1927, a result of declining prices. Argentina abandoned the gold standard in December 1929, earlier than most countries. For much of the previous period, the country had operated a currency board, in which a body known as the caja de conversión was charged with maintaining the peso's value in gold. The devaluation of the peso increased the competitiveness of its exports and protected domestic production.
Currency overlay is generally increased by adding currency exposure, yet there is no risk premium earned for that added volatility in the long term. Thus investors with international portfolios often hedge their currency risk, normally using forward currency contracts, currency swaps, currency futures contracts, or currency options. Currency hedging can be done passively or actively. The stream of returns from passive currency overlay is negatively correlated with international equities, has an expected return of zero, and does not employ any capital. The overlay manager uses forward contracts to match the portfolio’s currency exposures in such a way as to insure against exchange