MercoPress. South Atlantic News Agency

South American faces “Crisis of confidence”.

Its group chief executive, Keith Whitson, is quoted as saying: "If the rumours (of a big build-up of big speculative positions) are correct, it is not at all helpful". Despite international laws to defend economies against the actions of currency speculators, Mr Whitson says the situation in Argentina is "delicately poised".

The warning from HSBC came as the International Monetary Fund (IMF) approved a 15-billion dollar (9.3 billion pound) loan to Brazil in what the London Times newspaper calls "an attempt to stave off the possible repercussions of devaluation of the Argentine currency of default by its government on 130-billion dollars of debt". The newspaper says the IMF hopes to bring forward plans for a 1.2 billion dollar rescue package for the Argentine economy but some analysts believe that up to 5-billion dollars could be needed to ensure stability.

The Times comments: "A default by the Argentine Government could lead to a crisis of confidence in all emerging markets, particularly in South America".

In 1997, global hedge funds, including those run by the international speculator, George Soros, helped to drive down the value of currencies in Thailand, Malaysia and Indonesia, leading to a prolonged economic recession across the region. Hedge funds were also a factor in forcing the United Kingdom out of the exchange-rate mechanism nearly ten years ago and reducing the value of the pound sterling.

Dangers can spread quickly round Latin America

Three articles in the same edition of the Times comment on Argentina's plight. One of the articles, headed "Argentina puts bankers to the test", the Times suggests there are worrying signs of "another storm of financial stability".

Its financial commentator, Martin Barrow, writes: " When HSBC's Chief Executive, Keith Whitson, accuses sinister forces of manipulative speculation in the Argentine financial markets, he is pointing to dangers that can spread quickly round Latin America and, as in 1997, round the Far East and emerging markets too... Argentina has a basic problem. It bound itself to the US dollar after earlier bouts of financial chaos, often internally generated.

The dollar has risen by 35 per cent over the past six years and