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General TradingD
Default
Default in finance occurs when a borrower fails to meet their legal obligations to repay a debt, such as missing interest payments or failing to repay principal on bonds or loans. A sovereign default, where a government fails to meet its debt obligations, can trigger significant market volatility and currency depreciation.
Example
“When Argentina defaulted on its sovereign debt in 2001, the peso lost over 70% of its value and equity markets plunged.”