### Summary
Inflation in Argentina has reached 113%, pushing 40% of the population into poverty, as the country faces an economic collapse that could see the far-right return to power under Javier Milei, a rock-singing former sex coach who has threatened to abolish the central bank.
### Facts
- 💸 Argentina is experiencing an economic collapse with annual inflation reaching 113%, its highest in over 30 years.
- 💰 Inflation has pushed 40% of the population into poverty as soaring prices outpace wages.
- 📉 The crisis escalated when the central bank raised interest rates to 118% to halt a sell-off in government bonds and the Argentine peso, which hit a record low against the dollar.
- ⬇️ Inflationary pressures forced officials to devalue the peso by 18% on Monday, which some economists believe may fuel further inflation, possibly reaching 150%.
- 🏛️ The far-right, led by Javier Milei, a rock-singing former sex coach, has gained popularity and threatens to abolish the central bank if they come to power.
- 🌎 This serves as a stark contrast to the inflation battle faced by the Bank of England, where inflation stands at 6.8% and interest rates have been raised to 5.25%.
### Summary
Many developing countries are frustrated with the dominance of the US dollar in the global financial system and are seeking alternatives, but no concrete proposals have emerged. The dollar's influence can destabilize economies and impose financial sanctions on adversaries. However, the alternatives to the dollar have not gained enough traction, and the dollar remains the most-used currency in global business.
### Facts
- The strength of the US dollar against the Nigerian currency has made imported goods, like garments, unaffordable for local consumers.
- The BRICS bloc, consisting of Brazil, Russia, India, China, and South Africa, along with other emerging market countries, are meeting to express their grievances about the dominance of the dollar in the global financial system.
- The BRICS countries have discussed expanding trade in their own currencies to reduce reliance on the dollar.
- The US dollar is the most-used currency in global business and has shrugged off past challenges to its preeminence.
- The alternatives to the dollar, such as the euro and China's yuan, have not gained enough international gravitas.
- The dollar's influence can impose financial sanctions and destabilize economies.
- Many developing countries, like Kenya and Zimbabwe, have expressed their frustrations with the dollar and are seeking alternatives.
- Despite the frustrations, the dollar still has its supporters and is seen as a stabilizing force in some economies.
### Summary
Many developing countries, including BRICS nations, are frustrated with the dominance of the U.S. dollar and will discuss alternatives at a summit in Johannesburg. However, the dollar's position as the dominant global currency remains unchallenged.
### Facts
- The strength of the U.S. dollar against local currencies in developing countries has caused prices of foreign goods to soar, leading to reduced sales and job layoffs.
- The BRICS bloc, consisting of Brazil, Russia, India, China, and South Africa, along with other emerging market countries, will discuss their grievances against the U.S. dollar's dominance at a summit in Johannesburg.
- The BRICS countries have previously talked about introducing their own currency, but no concrete proposals have emerged. However, they have discussed expanding trade in their own currencies to reduce reliance on the U.S. dollar.
- The U.S. dollar is the most widely used currency in global business and previous challenges to its dominance have failed.
- The BRICS countries launched the New Development Bank in 2015 as an alternative to the U.S. and European-dominated International Monetary Fund and World Bank.
- Developing countries are concerned about the U.S.'s use of the dollar's global influence to impose financial sanctions and the destabilizing effects of fluctuations in the dollar on their economies.
- While the euro and China's yuan have gained some traction in recent years, they still do not rival the dollar in terms of international gravitas.
- The alternatives to the dollar have not been able to gain dominance, and any shift away from the dollar will take time and trust.
- Some countries, such as Argentina and Zimbabwe, have experienced economic turmoil and have turned to the U.S. dollar for stability.
### Summary
Global dedollarization efforts are facing a credibility challenge as currencies such as the Russian ruble, Chinese yuan, and Argentine peso suffer significant declines, highlighting the perceived stability and reliability of the US dollar.
### Facts
- 📉 The Chinese yuan, Russian ruble, and Argentine peso have all experienced significant declines in value recently, causing their respective central banks to take measures to stabilize their currencies.
- 🌍 These declines come at a time when countries like Russia and China are actively trying to reduce their reliance on the US dollar in trade and investments, a trend known as dedollarization.
- 💰 However, the recent exchange-rate turmoil and instability of these currencies against the US dollar could undermine the dedollarization efforts and raise questions about the feasibility of finding a common currency to combat the dominance of the dollar.
- 💱 Dedollarization efforts in Argentina have been limited, with some even advocating for adopting the US dollar as the local currency to combat hyperinflation.
- 🌎 While the share of the US dollar in global reserves has decreased over the years, it still makes up nearly 60% of the world's foreign-exchange holdings, highlighting its long-standing dominance as the world's reserve currency.
Note: The text provided is truncated, so the summary and bullet points may not capture the complete context of the original text.
### Summary
The strength of the U.S. dollar against other currencies, such as the Nigerian naira and Zimbabwean dollar, has made it difficult for local consumers to buy foreign goods, leading to economic troubles in these countries.
### Facts
- 💰 The strength of the U.S. dollar has pushed the price of foreign goods beyond the reach of local consumers in Nigeria.
- 💸 Many developing countries are unhappy with the dominance of the U.S. dollar in the global financial system.
- 🌍 The BRICS bloc, which includes Brazil, Russia, India, China, and South Africa, will discuss their grievances against the dollar at a meeting in Johannesburg, South Africa.
- 💵 The alternatives to the U.S. dollar, such as the euro and China's yuan, have not been able to rival its dominance.
- 🇦🇷 In Argentina, a presidential candidate is calling for the U.S. dollar to replace the country's troubled peso.
- 💼 In Zimbabwe, the U.S. dollar is widely used in transactions due to the instability of the Zimbabwean dollar.
- 💸 Vendors in Zimbabwe are even mending damaged U.S. dollar bills for a small fee due to a shortage.
### Credit
By: Dionne Searcey and Constant Méheut
Source: The Washington Post
Argentina is experiencing an economic collapse with annual inflation reaching 113%, pushing 40% of the population into poverty, and potentially leading to the return of the far-right under Javier Milei.
While strategic competitors in emerging markets are calling for change and the share of the US dollar held as official foreign exchange reserves has declined, it is unlikely that there will be a major shift in the US dollar's role as the central global currency due to the stability and reputation of the US government, as well as the challenges and limitations of other options like the renminbi.
Argentina should focus on fiscal spending cuts and a recession rather than adopting the dollar as its currency to address the recent peso crash, according to an economist.
The shift to a dollar-based economy in Argentina following Javier Milei's win in the preliminary elections is expected to bring price stability and potential benefits for the pet food industry, including easier importing and increased foreign investment, although short-term economic instability may lead to lower consumer spending.
Argentina should consider pegging its currency to Brazil's real instead of the US dollar, as it would help address economic problems such as exchange-rate instability and hyperinflation, according to an economist.
Argentina plans to use a $7.5 billion disbursement from the International Monetary Fund to repay part of the money it borrowed from China through a currency swap line.
Brazil's finance minister has proposed using Chinese yuan guarantees to reduce trade risks with Argentina, as the country faces a dollar shortage and its currency, the peso, continues to perform poorly in the global market.
Latin American currencies are under pressure from a strong dollar as traders await remarks from Federal Reserve Chair Jerome Powell on U.S. interest rates, while the Chilean peso reaches a three-week high; meanwhile, Argentina stocks are seen as a "safeguard of value" amid economic turmoil, but the country faces opposition to joining the BRICS bloc.
The article discusses the challenges of dollar hegemony and argues that the attempt to create a Brics currency is misguided due to the vast differences in the economies and political systems of the Brics countries. It suggests that the world needs a better currency system, as the current one heavily relies on the US dollar which poses risks to the global economy.
Argentina's front-runner presidential candidate, Javier Milei, plans to scrap the peso currency and cut taxes on grains, but advisors state that implementing these proposals would take time and may require the use of executive decrees to bypass congressional hurdles.
Argentina is facing the highest triple-digit inflation in over three decades, potentially reaching near 200% by year-end, which is causing increased poverty, anger among voters, and memories of past economic crises.
The dollar is not likely to lose its status as the global reserve currency despite the expansion of the BRICS group of nations and their aim to find an alternative, as technology and not commodity-based currencies are expected to be the driving force in the future.
El Salvador's experiment with making bitcoin an official currency is difficult to analyze due to its opaque nature and multiple objectives, including financial inclusion, revenue generation, and enhancing the president's reputation. The country has made bitcoin purchases, but the exact amount is unknown, and it has experienced a loss of value in its bitcoin investments. The government's digital wallet, Chivo, faced security issues, and the adoption of bitcoin for transactions and remittances has been limited. Comparatively, Argentina has surpassed El Salvador in terms of bitcoin adoption. The move to bitcoin has garnered attention for El Salvador but has also raised concerns about the lack of a coherent educational process for mass adoption.
The dollar's status as a global reserve currency is facing challenges as countries like China and India promote trade in their own currencies, digital currencies gain popularity, and geopolitical conflicts threaten the international monetary system dominated by the dollar.
María Barro, a domestic worker in Buenos Aires, supports the idea of dollarizing Argentina's economy as a hedge against inflation and the devaluation of the local peso, but is undecided about voting for libertarian candidate Javier Milei due to his aggressive style; Milei's dollarization plan has sharply divided opinion, with supporters arguing it is a solution to inflation while detractors say it would sacrifice the country's ability to set interest rates and control money circulation.
Argentina's peso currency is at risk of another devaluation after the upcoming presidential election, with estimates suggesting a 16.6% devaluation in the three months following the vote.
Argentina is facing skyrocketing inflation, with consumer prices soaring by 12.4 percent in August and an annual inflation rate of 124.4 percent, putting the ruling coalition on the defensive ahead of the upcoming presidential race.
Bitcoin's price in Argentine pesos has risen significantly, but due to high inflation rates in Argentina, it has not been a reliable store of value compared to the US dollar.
Javier Milei, the "anarcho-capitalist" presidential candidate in Argentina, gained popularity by promising to dollarize the economy and provide a solution to the country's economic crisis. However, economists and the IMF have raised concerns about the feasibility of dollarization as a solution.
Corporate Argentina opposes full dollarization of the economy, according to a survey of 125 business people, with only two individuals supporting the proposal put forth by presidential election frontrunner Javier Milei, highlighting potential challenges faced by Milei if elected.
Janet Yellen, the Treasury Secretary, believes that no existing currency can replace the US dollar as the global reserve currency, despite its recent decline, but warns that its share may continue to decrease as countries diversify; however, there are alternative investments like gold, fine art, and real estate that can help mitigate risks associated with the dollar's decline.
Argentina's peso hits a historic low of 1000 pesos per US dollar on the black market as the country's inflation remains high and uncertainty ahead of the presidential elections increases demand for hard currency.
Argentina's upcoming presidential election will require the next government to cut spending, stop printing money, and address the country's high inflation and economic challenges, according to executives and members of the business community.