The economy fell by 6.7 percent in June, the worst monthly fall since the global financial crisis of 2009. Argentina’s high inflation rate is one of the factors that make it more vulnerable than other emerging markets to moves by global investors away from risky assets. One dollar (77p) is now worth about 37 pesos. At the start of the year it was about 18 pesos. Interest Rate in Argentina averaged 62.22 percent from 1979 until 2020, reaching an all time high of 1389.88 percent in March of 1990 and a record low of 1.20 percent in March of 2004.
BUENOS AIRES - After Argentina’s economy boomed in 2017 and market-friendly President Mauricio Macri’s coalition triumphed at legislative elections last October, economists had rosy expectations for the South American country at the beginning of this year. First, price stability is fragile, and the inflation rate can rise rapidly. But no one expected the speed with which the peso plunged against the dollar in April, due to investor concerns about the government’s ability to control inflation and interest rate hikes by the U.S. Federal Reserve, which strengthened the dollar worldwide.
The spike in inflation and rise in interest rates have weighed on the economy, but in addition to the financial storm, Argentina has been hit by some bad luck beyond Macri’s control.
One dollar (77p) is now worth about 37 pesos. As an Economist from Buenos Aires, I recommend you should not get into our central bank notes.
And I will develop below. While the IMF loan gave reserves a boost, continued pressure on the peso has begun to prompt renewed central bank interventions in recent weeks. The “high interest rate” of Argentina, comes from BCRA which is the equivalent to our national federal reserve. “There are no easy answers for Argentina to its current woes,” he said.With Recep Tayyip Erdoğan, the Turkish president, under pressure from US sanctions imposed by Financial markets around the world sold off on Thursday as fears over the fallout from the crises unfolded, while there are also concerns over the impact of the White House’s various The latest developments come as the US dollar gathers strength this year with the Although the problems stem from Washington, there have been concerns the fallout could infect markets around the world, with Argentina and Turkey in the eye of the storm.Argentina’s president, Mauricio Macri, has said a lack of trust from the markets had forced him to ask for help as the peso weakens and inflation runs at 30%.Despite the massive increase for interest rates to 60% – by comparison the cost of borrowing is as low as 0.75% in the UK – economists said Argentina may still require further government action to bring the crisis under control.Edward Glossop of the research consultancy Capital Economics said Buenos Aires would need to give more details about how it planned to meet the targets for tax and spending set by the IMF.
Macri’s government has reduced that practice, but his hikes to utility prices as part of an effort to reduce subsidies and close the fiscal deficit have kept inflation high.
The recession threatens two of Macri’s main campaign promises: achieving “zero poverty” and creating quality jobs for Argentines.
That could mean trouble as Macri prepares to seek re-election in 2019. The worst drought in decades slashed the harvests of soybeans and corn, the backbone of Argentina’s economy. $1 (77p) is now worth about more than 39 pesos, having been worth about 18 pesos at the start of the year.Paul Greer of the City fund manager Fidelity said countries across emerging markets were being targeted by investors due to their economic problems, including high levels of debt and imports.