# PROMPT: Emerging Market Debt Crisis Simulation
**ID:** SIM-MACRO-006
**Tags:** ["Macroeconomics", "Emerging Markets", "Currency Crisis", "IMF", "Sovereign Default"]

## Scenario
**Context:** A large Emerging Market economy (simulated as "Argon") with significant USD-denominated debt faces a "Sudden Stop" in capital flows.
**Trigger:** The Federal Reserve unexpectedly hikes rates by 50bps, strengthening the USD index (DXY) to 115.
**Impact:**
*   **Currency:** The Argon Peso (ARP) depreciates 30% in 48 hours.
*   **Reserves:** Central Bank foreign FX reserves are depleted defending the peg.
*   **Politics:** Government imposes strict capital controls, trapping foreign investor capital.
*   **Credit:** CDS spreads widen to 1,500bps (Distressed levels).

## Task
Act as the **Head of Emerging Markets Debt** at an Asset Management firm.
1.  **Liquidity Analysis:** Assess the liquidity of our "Argon" bond holdings. Can we exit, or are we "gated"?
2.  **Recovery Value Estimation:** Estimate the "Haircut" (loss given default) in a potential restructuring scenario based on historical IMF precedents (e.g., Argentina, Sri Lanka).
3.  **Contagion Screen:** Identify other EM nations with similar "Twin Deficits" (Fiscal + Current Account) that might fall next (the "Domino Effect").
4.  **Strategic Pivot:** Recommend a switch from Local Currency debt to Hard Currency (USD) corporate exporters who benefit from the devaluation.

## Output Format
*   **Liquidity Memo:** Status of market depth and bid-ask spreads.
*   **Restructuring Model:** Expected recovery rate (e.g., 40 cents on the dollar) and exit yield.
*   **Watchlist:** Top 3 countries to short immediately.
*   **Trade Recommendation:** Specific "Long Exporter / Short Sovereign" pair trade.