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The second lesson is that a fixed nominal exchange rate does not protect countries from real exchange rate misalignment. A 22 percent real appreciation of the Argentine peso from 1998 through 2001 contributed to the problems of the convertibility policy by undermining the country's competitiveness and adding to its current account deficit. Similarly, as the following chart shows, some of the most distressed EU members experienced real currency appreciation in the years leading up to the crisis, both relative to the rest of the world, and relative to Germany, the anchor economy of the euro.
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