MEXICO CITY, MEXICO / ACCESSWIRE / December 12, 2019 / Increasing volatility in South America’s second-largest country and economy has raised fears of a widespread financial crisis, with Argentina currently at risk of registering its ninth sovereign debt default. While several factors remain at play in regard to the country’s ability to make satisfactory payments on its debts, Pablo Soria de Lachica points to the ongoing devaluation of the Argentine peso as one of the most difficult and persistent issues affecting the nation’s economy as a whole. The renowned forex expert discusses the problems facing Argentina’s peso, which has become mostly inadequate in terms of reducing the country’s debt due to the total amount consisting mostly of stronger foreign currencies.
Although Argentina’s economy has been in flux for several years, a primary catalyst for its current state can be traced back to September 2018, when President Mauricio Macri obtained a record bailout loan from the International Monetary Fund (IMF) that totaled $57.1 billion, with the hopes of reining in deficits and steadying the peso that was at an all-time low. While part of the deal included a request from the IMF for Argentina to enact spending cuts and end central-bank financing of the federal deficit, notably absent from the stipulations was a fixed peso to US Dollar exchange rate – something many economists saw as detrimental to the country’s financial crisis. “The IMF does to some degree take these factors into account, but in general, it tends to favor a quick and front-loaded adjustment,” Capital Economics analyst Edward Glossop told Business Insider when the deal was initially developed.
Prior to the country’s presidential primary elections in August 2019, inflation was at 55.8%, which rose even higher after primary results indicated a likely victory for Macri’s challenger, Alberto Fernández, in the looming October 2019 election. This prompted Macri to issue an order for the nation’s central bank to authorize dollar purchases to stem the outflow of money leaving the country and stabilize foreign currency reserves, which were rapidly declining as Argentina tried to provide support for the peso. On the day after Fernández’s eventual presidential election victory, the Central Bank slashed the monthly limit on the amount of dollars that can be purchased even further from $10,000 to $200 via bank accounts, or $100 via cash transactions.
The Argentine peso lost more than half its worth in 2018, falling an additional 35% in August 2019. Despite efforts to curb the peso’s fall, record inflation is predicted to reach 53% by the year’s end, in addition to unprecedented currency devaluation. With more than 80% of the Argentine government’s debt comprised of foreign currency, Pablo Soria de Lachica notes that the recent devaluation of more than 20% will make it harder for the nation to repay it – an aspect compounded even further with interest rates climbing above 60%, failing to hinder inflation as a result.
Internationally acclaimed broker and forex expert Pablo Soria de Lachica is an MBA graduate of Universidad Tecnológico de México, and currently collaborates with Kartoshka, a leading innovator of technology for sales, telemarketing and customer support. He also develops integrated online trading tools for investors, conducts market analysis, and oversees the day-to-day financial operations for several prominent international companies. A devoted philanthropist, Pablo’s community support includes active involvement in local Boy Scouts and Delta Epsilon Sigma programs, along with contributions to organizations that include the America-Israel Cultural Foundation, Jewish Federation of Greater Phoenix, and Bridges for Peace.
Pablo Soria de Lachica – Foreign Exchange Specialist: http://PabloSoriaDeLachicaNews.com
Pablo Soria de Lachica Discusses Current Developments Affecting the Argentine Peso: https://finance.yahoo.com/news/pablo-soria-lachica-discusses-current-112500509.html.
Pablo Soria de Lachica Examines the Impact of Argentina’s Presidential Elections on its National Currency: https://finance.yahoo.com/news/pablo-soria-lachica-examines-impact-031000360.html.
SOURCE: Pablo Soria de Lachica
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