Argentina Braces for Another Peso Devaluation Amid Economic Strain

Argentina is grappling with a major economic challenge. Its inflation rate has soared to 211%.

This is causing a growing gap between the official and parallel exchange rates. The country is now bracing for another potential devaluation of its currency, the peso.

This comes shortly after its value in dollars was cut in half. Since the year’s start, the peso’s value has been dropping in popular parallel markets.

These markets have long shown rates quite different from the official ones, controlled by strict rules.

In these markets, one dollar costs over 1,200 pesos. In contrast, the official rate is around 820 pesos.

This gap, nearly 50%, has doubled recently. In December, the government reduced the peso’s value by over 50%.

This trend is making people think that the government might devalue the peso again soon. Especially with monthly inflation over 25% in December, this is much higher than the peso’s monthly decrease of 2%.

Pablo Besmedrisnik, a director at Invenómica, thinks devaluing the peso before March and April would be wise.

This is when soybean and corn harvests happen. If not, farmers might delay selling their crops abroad. This would hurt Argentina’s money situation.

The central bank has not commented on this.

Argentina’s many parallel exchange rates are popular. Access to the official market is very limited.

This year, the “CCL” rate fell by 20% and the “blue” rate by 17%. The official rate dropped just 1.3%.

Agustín Etchebarne, from the Freedom and Progress Foundation, suggests a big change. He thinks Argentina should either create a single, free currency market or start using the dollar.

He says that decreasing the peso’s value by 2% each month, with much higher inflation, won’t work.

More: Argentina news in English, every day from The Rio Times.

This article was drafted with automated assistance and reviewed before publication. How we use AI · Report an error