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Argentina default may threaten central bank reserves

Developments this week could spell trouble for the central bank, whose reserves have dwindled

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The Central Bank of Argentina

The Argentine government's debt default yesterday is likely to put additional pressure on the central bank, which saw foreign reserves dwindle over the past year as it fought to maintain the peso's peg against the dollar amid soaring inflation.

The default was triggered early Thursday (GMT), when Argentina failed to reach a deal with holdout creditors who snapped up non-performing debt at a discount after the government's 2001 default, and are demanding to be paid in full.

A US court ruling

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