In one of his initial significant actions, newly elected Argentinian President Javier Milei has opted for a substantial devaluation of the local currency to address an ongoing economic emergency. This decision unfolds as Bitcoin prices in Argentina show signs of cooling off from a recent all-time high just a few days ago.
Local Bitcoin Prices Surge to Unprecedented Levels Amidst Argentina’s Currency Devaluation
On December 12, President Milei made the announcement, revealing a sharp devaluation of the Argentinian currency (ARS) and simultaneous cuts to energy and transportation subsidies. The devaluation plan entails reducing the Argentine peso’s value by 50%, shifting from 400 pesos to the US dollar to a new rate of 800 pesos to the dollar.
Economy Minister Luis Caputo acknowledged that the country would face a challenging period in the coming months, stating, “For a few months, we’re going to be worse than before.” He emphasized Argentina’s entrenched “addiction” to fiscal deficits. President Milei defended the decision, asserting that the country lacked the luxury of time to explore alternative solutions.
Reports indicate that Argentina is grappling with a staggering 143% annual inflation rate, a sharp decline in the value of its currency, and a situation where four in ten Argentines are living in poverty. Furthermore, over the last decade, Argentina has experienced an average annual inflation rate of 40%. Adding to the complexity, this move follows the central bank’s decision to raise rates to a record 133% just two months prior.
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