The peso rollercoaster ride

April 2018: you can buy 1€ for 20 ARG pesos.
August 2018: you already need to put up 40 ARG pesos for 1€.
In only 4 months, the Argentinian peso lost half of its value compared to the euro (or dollar). Inflation is soaring, and we have already seen the prices of basic goods such as gas for cars increase. Argentinians see their hard-earned savings disappear into thin air, again. Here, they know a crisis when they see one; they already had their fair share in the past (years 200Xs). Ghosts of ‘the Corralito’ return, when people could not withdraw money from banks freely anymore, making life very difficult for ordinary Argentinians.

The government takes measures to prevent the peso from tumbling further and to keep inflation under control. But it cannot escape the fundamental flaws of its economy that led to this: a huge budget deficit, a (too) low tax rate, high government debt and a very “fat” government with too many levels. Truth is that current president Mauricio Macri inherited a very distorted economy from Cristina Fernandez de Kirchner (they call her ‘CFK’ here), the former president. Argentina needs strong reforms — but the question is whether this Macri-government will be able to pull through. 2019 is an election year — and no government is willing to take the ill-needed but unpopular measures that could backlash in the voting booth.
