- In Argentina “All Bets Are Off” As Peso Disintegrates
by Tyler Durden, https://www.zerohedge.com/
“All bets are off” in Argentina” – as Bloomberg puts it – where the value of the local peso has plummeted, falling 20% this week alone. It is now 50$ weaker on the year versus the USD, making it the worst performing currency of 2018 and sending massive shockwaves through Argentina’s economy. The effect on business owners and anyone who transacts in local currency has been profound, according to Bloomberg.
“There’s no clear price reference after the peso plunge,” one business owner told Bloomberg. The price plunge has created havoc for him and his surgical equipment business, where he buys in foreign currencies and sells in pesos.
Unlike hyperinflating economic basket case Venezuela, Argentina is a sizable $640 billion economy that is now being put to the test to see how much strain it can truly endure.
The peso crippling could also be a precursor to political unrest, as President Mauricio Macri’s chances of being reelected are reportedly falling, despite being known as a leader who has been friendly to the markets over the course of his tenure. However, as a result of the recent turmoil, he’s “struggling” to restore investor confidence in the Argentinian peso.
Argentina and its Central Bank have taken a number of decisive steps to try and halt the plunge, yesterday hiking interest rates to the world’s highest 60%. Previously, the country had requested quicker payouts from the International Monetary Fund, which promptly granted the collapsing country’s request.