### 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
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.
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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.
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 Argentinian peso weakened against the dollar on the black market while stocks rose as investors awaited the approval of Argentina's loan program by the International Monetary Fund (IMF) board, following a staff level agreement in July.
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.
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.
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 should avoid dollarizing its currency and learn from Ecuador's experience, as it could lead to a prolonged period of economic weakness, according to economist Robin Brooks.
Argentina's Consumer Price Index likely rose 11.8% in August, the highest monthly figure since 1991, due to a sharp devaluation of the local peso currency and the country's ongoing inflation crisis.
Argentina's dollar scarcity should not prevent the country from adopting the dollar as its currency, according to economist Francisco Zalles, who believes that dollars would flow back into Argentina once it makes the switch and that Javier Milei's plan to dollarize would be successful. However, other commentators have warned that adopting the dollar without ample reserves could have catastrophic consequences.
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.
Presidential front-runner in Argentina argues for the elimination of the peso and the closing of the central bank, citing the country's history of hyperinflation and corruption.
Argentina is facing a presidential election amid an economic crisis marked by soaring inflation, recession, and a high poverty rate, with leading candidates divided over how to address these issues, including a suggestion to dollarize the economy.
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