Another Fiat to Bite the Dust?
The struggling fiat currency of Argentina has hit a record low against the US Dollar amidst the growing concerns surrounding the longer than expected recovery of the economy. The peso began its journey this year with strength but have lost more than 11 percent in 2019.
The fiat currency plummets for a fourth straight day despite the central bank raising 7-day Leliq rate to 51.862 percent. This plunge has made Peso the worst performer against the USD.
After the sell-off in 2018, this another record low against the greenback has renewed the fears. For now, the currency, however, remains within the limits of non-intervention trading band with the IMF as part of a $56.3 billion deal last year.
“This is a really ugly signal (for the market),” said Federico Furiase, a Buenos Aires-based economist at consultancy Eco Go.
Inflation Soar, Peso expected to Plunge even more
The economy of the country is shrinking while registering one of the highest inflation rates in the world. Just recently, a central bank poll of economists increased their inflation forecast for this year to 31.9 percent from 29 percent. According to the IMF, in 2018 Argentina was among the four countries in the world with the highest rate of inflation after Venezuela, South Sudan, and Iran.
But this is not all for the peso, analysts are seeing it weakening even further against the greenback as Goldman Sachs said in a note on Wednesday.
The uncertainties around the presidential election are likely to drag the peso further down. In response, other Latin American currencies also fell against a stronger dollar which in response hit nearly a three-week peak against some currencies.
“Argentina’s country risk increased by 130% in 2018 due to delayed reforms, constant devaluation and loss of foreign exchange reserves. The country risk has fallen significantly from its high of 817 basis points to the current 706. However, it remains the second highest in the region after Venezuela,” reported ZeroHedge.
Time to Buy Bitcoin
Traders have warned that while the bank deposits are growing in the short term because of the high-interest rates, a “fresh crisis of confidence” can turn the savers towards the safety of dollar that will only put more pressure on the local currency.
Amidst this ongoing chaos that just keeps on mounting up, Bitcoin offers the perfect alternative option as it did to Venezuela citizens. Just recently, Argentina had settled an export deal with Paraguay in Bitcoin through Bitex.
So, Argentina already seems to have taken a liking towards Bitcoin further evident from the fact that since December 2017, the Bitcoin traded on peer-to-peer exchange LocalBitcoins have been seeing a surge.
Source: Coin Dance
Though Argentina citizens have already tuned towards Bitcoin by registering record volume in the past few months, it’s time that they double down with using and investing in Bitcoin just like Venezuela where Bitcoin is saving families from the utter chaos of hyperinflation, and economic and political crisis.