Update the economic situation in Argentina to reflect recent events. How is the
ID: 1107835 • Letter: U
Question
Update the economic situation in Argentina to reflect recent events. How is the value of the peso faring? Do you think it was wise to cut the ties between the peso and the dollar? Why did Argentina peg its currency to the dollar in the first place? Do you think that the link between the peso and the dollar contributed to Argentina’s problem’s? Explain.Update the economic situation in Argentina to reflect recent events. How is the value of the peso faring? Do you think it was wise to cut the ties between the peso and the dollar? Why did Argentina peg its currency to the dollar in the first place? Do you think that the link between the peso and the dollar contributed to Argentina’s problem’s? Explain.
Explanation / Answer
The peso has gone into free-fall, plummeting just over 17% against the dollar since the beginning of the year. Argentina’s peso tumbled as much as 30 percent as newly inaugurated President Mauricio Macri fulfilled his campaign promise of letting the currency float freely.
It wasn’t wise to cut the ties between the peso and the dollar. Because the peso weakened 27 percent to 13.4 per dollar as of the close of trading on the MAE electronic trading platform, after sinking as low as 13.95. On the black market, which Argentines used to skirt the controls that limited their ability to buy greenbacks, the currency had most recently traded at about 14.5 pesos per dollar.
The government pegged its currency against the US dollar so it can allow for the devaluation of the peso and cut on the hyperinflation.
Yes, the link between the peso and the dollar contributed to Argentina’s problems. Because Black-market currency traders still dotted Florida on Thursday, shouting “exchange, dollars, euros and reais. This has affected the move by Argentina to achieve the desired devaluation on its currency.
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