In an economics textbook, Modern Principles of Economics, the authors, Tyler Cowen and Alex Tabarrok, write that "The Argentine government did not have enough U.S. dollars to keep up the value of the peg,"(referring to the 1991 peg) almost suggesting that had they had enough US dollars that the peg would be kept. How does having more US dollars keep the value of the peso up?
If the exchange rate of the Peso was dropping due to decreased demand(people were converting pesos to dollars), shouldn't the government buy a non-USD currency with pesos to reduce the supply and push the price up, keeping the peg intact. How does having "enough" US dollars solve that problem?
Clearly, looking at this from just one perspective, the exchange rate, is limiting in itself, but the sentence seems to suggests it was a possibility. I would appreciate it if anyone could explain the authors rationale.