The Argentine peso loses almost 12% against the greenback in January; Inflation is expected to rise sharply – Economics

The Argentine peso has fallen steadily against the US dollar this month, losing almost 12% since January 1, reaching almost 100% this year, similar to the rates registered in 2022.

The Argentine peso continues to fall

Argentina is currently in a devaluation scenario that has the possibility of causing an escalation in prices this year. The value of the Argentine peso against the US dollar has fallen by almost 12%, reaching a record rate of 386 pesos per dollar on January 27th. blue,Variant.

The exchange rate was constant rising since December, when it reached 356 pesos per dollar, breaking a record low for the peso at the time. The government has taken steps to maintain stability by injecting dollars to meet demand from registered importers in the market and announcing a purchase of more than $1 billion of its own foreign debt.

However, this appears to have had the exact opposite effect and now local analysts are worried about the balance of the country's reserves after this withdrawal, which would affect the central bank's capabilities. María Castiglioni Cotter, head of an economic consulting firm, criticized the measure that says it makes no sense as long as the country faces a budget deficit.

Inflation and the coming crises

This ongoing decline in the value of the Argentine peso is already impacting the prices that citizens have to pay for goods and services, even as the government has taken a series of measures to limit price increases on several products. Calculations from private companies predict an inflation rate of more than 5% in January, a high number compared to countries like Brazil, which is expected to rise by less than half a point.

Salvador Di Stefano, another local analyst, believes that buying debt could exacerbate the problems the state is currently facing. Di Stefano explained that this could affect the amount of foreign currency available for imports and slow the economy even more.

According to him, the dollar will continue to fall as the government seeks to inject dollars to stop the devaluation of the peso, a similar strategy that President Macri used back in 2018. Furthermore, public spending would reinforce this devaluation, as the government is expected to ramp up due to the proximity of the elections. Private analysts expect Argentine inflation is expected to reach over 95% this year.

What do you think about the devaluation of the Argentine peso and its impact on inflation rates? Tell us in the comments section below.

Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price surge occurred in December 2017. He has a background as a computer engineer, lives in Venezuela and is affected by the cryptocurrency boom on a social level. He offers a different perspective on crypto success and how it helps the unbanked and underserved.

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