Rabu, 17 April 2013

Argentine peso blues update



The chart above is an updated version of the one I posted last month. This is like watching a slow-motion train wreck. Argentina is headed for another big devaluation, and the economy—already suffering from restrictions on imports and capital flight—is going to take a big hit. The so-called "blue" rate shows that the market is expecting a devaluation of the official rate of more than 40%. It's starting to get ugly.

As I mentioned in my prior post, visitors to Argentina will want to take lots of $100 bills with them, rather than relying on ATMs and credit cards to pay their expenses. Dollar cash is in huge demand in Argentina, because the central bank is growing the supply of Argentine currency at the rate of 40% per year, effectively debasing the currency in a major way.

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