A sharp decline in the value of the Argentine peso against the US dollar has caused the blue rate, one of several parallel exchange rates in the country, to sink to its lowest point in five months. The current economic environment, which includes a struggle between the rich and the poor, is partially blamed for the currency’s decline. President Alberto Fernández and the Argentine courts are also cited as factors.
Argentine Peso Hits New Lows Against US Dollar
The Argentine peso is in a state of panic, with its value plunging to record lows. On December 23, the informal rate of exchange between the Argentine peso and the US dollar, known as the “blue dollar”, reached 340 pesos. This marks a five-month low, following a period of relative stability.
The last time the peso dropped as low as this was in July. The country has also experienced political unrest following the resignation of Finance Minister Martín Guzmán. The historical low exchange rate – 350 pesos per US dollar – was reached in June.
Analysts have identified a number of possible explanations for the current situation. One of them is the holiday season, when Argentines take out their foreign currency savings to pay for vacations. Political factors may also be contributing to the peso’s decline.
Financial Instability and Political Conflict
President Alberto Fernández disregarded a ruling by the Argentine Supreme Court that would have granted the city of Buenos Aires a higher percentage of provincial tax collection. This decision has raised questions about the country’s legal security, and could have an effect on the value of the Argentine peso in the future.
Miguel Kiguel, former Secretary of the Treasury, commented on this issue:
It is only natural that there are questions about the fulfillment of contracts. If the government does not adhere to the ruling of Supreme Court, the question of “what is fulfilled” and “what is not” is now open.
This dispute could damage investor confidence. Those with savings in the country may try to buy US dollars, causing a sudden drop in exchange rates. Venezuela and Nicaragua are two other nations facing similar economic issues, with the bolivar now trading at 18 per US dollar, the highest rate ever.
What do you think about the recent behavior of the US dollar? What is the current exchange rate of the Argentine peso? Leave a comment in the section below.
Image credit: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is intended for informational purposes only. It does not constitute a direct or implied offer, solicitation or endorsement of any product or company. The author and the company are not responsible for any loss or damage caused or alleged caused by the use or reliance of any content, goods, or services in this article.