Argentine Peso Currency Review: USD/ARS Surges 11.89% in 14 Days
(Source: Wikimedia Commons)
The exchange rate between the USD to Argentine peso (USD/ARS) saw the highest return of currencies over the 14 day period from April 25 to May 9, 2018 with an increase of 11.89%. The Argentine peso has lost almost a third (~30%) of its value against the dollar YTD.
The large decrease in value of the Argentine peso is most likely a result of pressure on the Argentine peso due to a stronger American dollar and high inflation in Argentina. The current annualized inflation in Argentina is 25% despite target levels of 12-17%. When the prediction was posted, Argentina’s interest rates were 30.25%, however, as the Argentine peso depreciated, Argentina’s central bank raised interest rates to 40%. Argentina has also turned to the International Monetary Fund (IMF) for financial backing to support the Argentine peso. Argentina has had struggles with the IMF in the past and defaulted on its foreign debt in 2001. Argentina’s debt has increased immensely to $252.9 billion in 2018 from $178.9 billion in 2015. As the currency becomes weaker against the dollar, some are concerned about Argentina’s ability to pay back this debt. Even if the IMF agrees to give Argentina a credit line, the outcome is uncertain unless fiscal conditions are also tightened in the country to stimulate the economy.
This prediction was sent to current I Know First subscribers on April 25, 2018.
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