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Argentina’s Peso crashes in a year due to multiple factors similar to those prevailing in Pakistan

Argentina’s currency _ Peso has crashed in a year against the US dollar and other major currencies. On August 15, 2021, the US dollar-Peso official exchange rate stood at 97 and within a year the exchange rate widened to 134, by August 15, 2022.

In the black market, Argentinians are offering up to 300 Pesos for one US dollar these days. Details gathered by The Truth International revealed that the economy of Argentina has been collapsing gradually during the past year (Aug 2021 to Aug 2022) which was evident from the depreciation of the Peso by 37 against the US dollar and record 90 percent inflation for 2022.

Interestingly, Pakistan is also facing a similar situation and in recent months the Pakistani currency has dropped to 250 rupees to a dollar. The PKR, nonetheless, regained its value to around 210 rupees/dollar in the open market on Aug 15 as the country is close to receive loan from the IMF. Thus, the case of Pakistan and Argentina appears the same.

In Argentina, the rate of inflation is also projected to a record 90 percent in 2022 because of a constant decline in the value of the Peso due to a variety of external and domestic economic issues.

The Argentina Republic is the largest Spanish country in the South America. In size, it is the second largest country in this region as Brazil is the largest country in South America. The World Bank has estimated 45.38 million population of the Argentina Republic in 2020. The GDP of the country is around $383 billion in 2020. Buenos Aires is the capital city of Argentina.

 Around 30 months after taking office, the country found itself in a desperate economic situation, with a troubling run on the peso and a faltering economy coupled with weak reserves in the Central Bank’s coffers. The underlying problem, as usual, was an utter lack of confidence in the government’s capacity to put together and execute a credible economic plan, particularly at a moment of global tensions that inevitably affected Argentina, according to Forbes magazine.

Once past the point of no return, then-president Mauricio Macri announced that he had instructed economy minister Nicolás Dujovne to seek an emergency bailout from the International Monetary Fund. What remained of Macri’s presidency was a nation on a high-alert as the peso’s value continued to sink and a series of interchanging officials running the main economic institutions put in place emergency measures that allowed the administration to finish its constitutional mandate in flames, the first non-Peronists to do so since the return of democracy in 1983.

Coincidentally, President Alberto Fernández has faced a crippling run on the peso that has stretched out over several weeks during the 30th month of his Presidency. During this time an exhausted economic model has failed to generate confidence and Central Bank reserves.

And it comes at a moment where a global re-evaluation of risk threatens to push advanced economies — and therefore the rest of the world — into recessionary terrain that includes high inflation and intense geopolitical risk, including an ongoing war sparked by Russia’s invasion of Ukraine. Argentina faces an incredible opportunity to take advantage of its natural resources yet record agricultural exports haven’t translated into a burgeoning all-around economy as a rebound in industrial sectors is stifled by a lack of dollars for investment and imports, while galloping inflation destroys workers’ purchasing power. The question everyone is asking these days – including vice president and detractor-in-chief Cristina Fernández de Kirchner – President Alberto Fernández will pull through, or whether the crisis will trigger some sort of institutional crisis that forces him to call early elections or step aside.

Javed Mahmood
Written By

I am an experienced writer, analyst, and author. My exposure in English journalism spans more than 28 years. In the past, I have been working with daily The Muslim (Lahore Bureau), daily Business Recorder (Lahore/Islamabad Bureaus), Daily Times, Islamabad, daily The Nation (Lahore and Karachi). With daily The Nation, I have served as Resident Editor, Karachi. Since 2009, I have been working as a Freelance Writer/Editor for American organizations.

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