Economists say that inflation is a monetary phenomenon. In other words, permanent currency issuance without the support of reserves and economic growth – that is, the production of goods and services – leads to general price inflation, the flip side of which is the depreciation of currency notes.
At the beginning of 2023, there was a dynamic in terms of the price of Latin American currencies, revealing the weakness of the Argentine economy: while the neighboring countries’ emissions appreciated against the dollar, the Argentine peso – so far – currency. Very underrated.
It contains The Argentine peso fell 10.5% in the first two months of the yearDue to the advancement of the official dollar in the wholesale market, its evolution is controlled by the interventions of the central bank.
According to data from BloombergDuring the same period, The Chilean peso rose 4.7% The value of the US bill fell against the dollar, i.e. in the neighboring country. The Uruguayan peso rose 1.6% The Brazilian real advanced 1.5 percent. The most important thing is to reassess Mexican peso Against the US Dollar: 7.7% Since the beginning of the year.
From March 6 US dollar Negotiated to 18 Mexican pesos on average. Referring to the profit of the last seven days, the US dollar Indicates a fall 0.6%So that still maintains a decline from a year ago 11.4 percent. That is, 11.4% more goods are being bought than a year ago because Mexican pesos are on hand.
Inside the dollar Argentina The total market closed at 199.34 pesos, up 12.5% compared to $177.16 at the end of 2022.
Inside the dollar Uruguay It is down 53 cents, or 1.3%, to 39.44 Uruguayan pesos so far in 2023. And inside Chili The US currency lost 49.37 Chilean pesos to 798.88 Chilean pesos. In Costa Rica The dollar has gained 39.24 Costa Rican colones so far in 2023, up 6.6% to 552.49 Costa Rican colones.
In Paraguayan The dollar lost 187.26 guarani, or 2.5% in 2023, to 7,177.03 guarani. In Brazil, the dollar has fallen 2.1% so far this year to 5.18 reais. In Dominican Republic The dollar fell 88 Dominican peso cents, or 1.6%, to 55.37 Dominican pesos in 2023. A similar phenomenon was observed Colombia and PeruThe dollar fell 3% and 0.8% in 2023 to 4,705.46 Colombian pesos and 3.77 Peruvian soles, respectively.
He Mexican peso It was Mexico’s legal tender and was the first currency in the world to use the “$” symbol, which was later adopted by the United States for the dollar. this too Fifteenth most traded currency in the worldTraded first in Latin America and third only on a continental scale after the US and Canadian dollars.
Mexican peso By the end of 2022, it had become the second most appreciated currency against the dollar, a big surprise A situation where many currencies cannot cope with international factors.
According to the Bank of Mexico (Panco), the Mexican peso At the end of 2022 it had an estimate of 4.9% $19.50 pesos to the dollar compared to $20.53 the day before. This is the best annual performance in a decade.
Argentina’s economy, Latin America’s third-largest economy, is going through a critical juncture for this election year, which remains uncertain.
However, various analysts cautioned 2023 could be a setback for the Mexican currencyA possible recession in Mexico’s neighbor and major trading partner, the United States, could end the peso’s resistance as exports, remittances and foreign direct investment fall.
Over the past three decades, Mexico has performed less than expected Compared to other countries in terms of economic growth, inclusion and poverty reduction. From 1980 to 2018, Mexico only grew by 2 percent. Mexico managed to recover from the blows of the coronavirus pandemic in 2022. Progress is still slow But its commercial openness is supported by its manufacturing base and steady exports.
The Argentine peso has been legal tender in the country since 1992, when it replaced the austral. Also known as “convertible peso” because of it Then in 2002 parity with the “broken” dollar Due to a bill.
In recent years, the Argentine peso has been hit hard and has had a series of devaluations: under Néstor Kirchner it depreciated by 9%, going from 2.87 to 3.13 pesos per dollar; The second episode came during the administration of Cristina Fernández de Kirchner, when the US currency overvalued by 211% and went from 3.13 to 9.74 pesos per dollar.
Then, on December 17, 2015, a week after the inauguration of Mauricio Macri as president, the dollar showed a 42% appreciation due to the disarmament of the “trading stocks” in place between October 31, 2011: it went from 9.83 to 13.95. Pesos per dollar.
In 2022, the fiscal deficit was high and the money issue to finance it contributed to accelerating the inflation rate, which exceeded 99%, showing macroeconomic imbalances that limit the sustainability of economic growth.
In early 2022, the Argentine government a Agreement with Finance The IMF’s new Extended Facilities Program allows the agency to postpone its maturities and strengthen its short-term reserves. The goal is to consolidate its control and achieve balance by 2025.
After a tumultuous year, with strong exchange rate tensions and three economy ministers, the current government faces challenges such as a jump to the dollar, a widening economic gap, upcoming presidential elections, debt maturities and more.
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