USD/ARS: The plot thickens as Argentina peso moves to obscurity
The devaluation of the Argentine peso aggravated on Monday as fears over the nation's economy intensified. The exchange rate between the US dollar and the Argentine peso surged by over 16%, hitting an all-time high of 350. Within the past five years, it has skyrocketed by more than 1,100%, positioning it as one of the most underperforming currencies worldwide.
Argentina's Peso Crash Persists
The Argentinian currency, known as the peso, has faced significant challenges in recent years due to ongoing mismanagement within the country. To address its financial struggles, Argentina sought assistance from the International Monetary Fund (IMF) after failing to meet its financial obligations on multiple occasions. As I mentioned in a previous article, Argentina has recently received additional financial aid.
On Monday, the ARS experienced another decline in value following the victory of Javier Milei, a candidate advocating for libertarian ideals, who secured 30.1% of the primary vote. Milei has voiced his dissatisfaction with various establishments, including the central bank of the nation. As an inexperienced politician, it remains uncertain how he would conduct his governance if he wins the upcoming November election.
Argentina is facing more profound issues than anticipated by experts. Firstly, the agricultural industry, which is crucial for the country's economy, is experiencing severe difficulties. New information has revealed that this year's corn and soybean harvest will deviate significantly from the usual standards. Consequently, Argentina has been compelled to import food in an attempt to reduce prices.
Additionally, Argentina has experienced a significant increase in inflation, and experts speculate that the actual state of affairs might be even more dire than what the official reports suggest. As a result, Argentina's central bank has had to raise interest rates due to the declining trust in the country's currency. Moreover, the unemployment rate has soared, surpassing 7%.
The weekly graph reveals a significant surge in the exchange rate between the USD and ARS over the last five years. It has skyrocketed by over 1,000% during this timeframe, resulting in a decline of the middle-income group. The pair continues to stay higher than all the average trends, and indicators such as the Relative Strength Index (RSI) and the Stochastic Oscillator suggest that it has reached an overbought level.
Consequently, the prediction for the Argentinian peso is pessimistic, with the upcoming point of interest being at 400.
The article called USD/ARS: The situation becomes more intricate as the Argentine peso becomes increasingly obscure was first published on Invezz.
