Despite fears after Thursday's resignation of President Fernando de la Rua that Argentina will abandon its one-to-one currency peg with the US dollar and default on its $132 billion debt, the international money and equity markets generally held their nerve yesterday.
"I think markets have seen this coming and they have discounted it," said the US Treasury Secretary, Mr Paul O'Neill, who has stuck to a hard-line position against giving additional financial aid for what he called the "insolvent" Latin American economy, even refusing to discuss the crisis with Argentinian officials.
Holders of Argentinian bonds, and Spanish banks and companies most heavily exposed to Argentina, stand to lose most. Pressure also mounted on the dollar peg in Hong Kong as the greenback rose in value as a haven against uncertainty.
Whatever happens in Argentina's worsening financial crisis, the severest pain will be felt by ordinary Argentinians, already suffering from a recession which has left a fifth of the working population without a job.
The options facing the new Argentine leaders include outright dollarisation as in Ecuador. This would allow foreigners to invest without fear of devaluation or inflation. However, it would not address the problem of massive debt or Argentina's uncompetitiveness as an exporter.
While removing the fears of devaluation that have killed domestic demand, it could paralyse the economy and cause relations to deteriorate dangerously with Argentina's major trading partner and neighbour, Brazil.
Indeed the government may not now have enough dollar reserves to substitute the dollar for the peso, and the move would be very unlikely to restore confidence in the economy.
Allowing the peso to float freely against world currencies, as Brazil did in 1999, would cause an immediate devaluation which would be calamitous for most citizens and businesses in Argentina, where people are paid in pesos but whose debts, from mortgages to bank loans and car payments, are held in dollars.
The devaluation of the peso in 1995 in Mexico led to an improvement in its export performance but this would be muted in Argentinian, a once-wealthy country isolated from major world markets which exports only 8 per cent of its total output.
The former president, Mr Carlos Menem, introduced the dollar-peso peg through the device of a currency board in 1991 to reduce inflation and increase international credit. This allowed free convertibility as long as the same number of pesos and dollars were in circulation, but in the long run led to over-borrowing and imposed severe curbs in the money supply. This prompted some provinces to print pseudo currencies to pay their bills as the crisis deepened this year.
The Peronists are once again in charge, but are reported to be divided between the full dollarisation of the economy and allowing the peso to float freely.
This "pesification" of the economy could carry the day as it would give the economy urgently-needed liquidity.
A Peronist economist, Mr Alejandro Mayoral, vice-president of the Bank of the Province of Buenos Aires, said a third option could be a new currency that would exist alongside the dollar and the peso and increase internal liquidity.
Argentina's misfortune is that it finds itself desperately in need of international aid at a time when the administration in Washington and the International Monetary Fund had decided to take a stand against bailing out bankrupt countries that do not meet stiff conditions.
Since President Bush came to office vowing to end bail-outs, the IMF has in fact worked out loan packages with Argentina and Turkey. Where Turkey is meeting the conditions, IMF officials say, Argentina continued with a heavy programme of government spending rather than force the population to accept even greater austerity.
"I don't think the violence is a function of whether the IMF did more or less," Mr O'Neill told the Wall Street Journal. "The violence is a function of the people's frustration with their government." Emphasising his differences with the Clinton administration's approach to such crises, Mr O'Neill said Clinton treasury officials "would have been in there giving them money - endlessly." The Bush administration is referring the situation to the IMF, though in practice the fund is virtually incapable of making major policy decisions without Washington's approval.
A default in debt could begin if Argentina misses debt repayments totalling $600 million due this month. Buenos Aires needs investors to purchase $451 million in short-term treasury bills for next week to fund government spending.