Final answer:
If Argentina gets inflation under control, there would likely be increased demand and reduced supply for the Argentine peso. Consequently, the peso would appreciate against the U.S. dollar, gaining more value in foreign currency markets.
Step-by-step explanation:
If Argentina were to successfully reduce its inflation rate substantially, the likely outcomes regarding its currency would be a change in both the demand for Argentine pesos and the supply of Argentine pesos, which would in turn affect the peso/U.S. dollar exchange rate. A decrease in inflation means that the purchasing power of the Argentine peso would not erode as quickly, making it more attractive to both investors and the public. This increased desirability would then lead to a higher demand for pesos. At the same time, because the value of the peso would be more stable, there would likely be less desire to exchange it for other currencies, resulting in a decreased supply of pesos on the foreign exchange market.
This shift in demand and supply dynamics should theoretically lead to an appreciation of the peso, meaning that each peso would be worth more in terms of other currencies. The result is a strengthened peso relative to foreign currencies, such as the U.S. dollar. This phenomenon is backed by economic principles, as exemplified by past episodes with other currencies like the Mexican peso, where changes in inflation produced similar effects on currency value and exchange rates.