Here is a lesson for those of you who think that the interest rate level is always the key to controlling foreign exchange rates.
Argentina’s currency crisis deepened today as an emergency interest-rate increase to 60 percent failed
to stop the collapse of the currency.
The peso extended losses after the central bank raised its benchmark measure by 15 percentage points to a global high. The hike was the second this month.
The peso was down about 12 percent against the dollar in trading earlier today.
Year-to-date, the peso is down 53.9%
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Chart via Bloomberg |
The high interest rate is the result of rampant price inflation which is the result of extreme levels of money printing by Argentina's central bank.
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![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjElLtXaGmfJq0mE04SuSVGgRhq2oPXUQ-YCXWmXalNIybkIfS1M_EjicsQWZVoHRPgWZO7dvFYndXDf9lX-Ym992qRR3zVQ3qm22cx6g85E_264M3H7B04kGDyUlLQ1brEaE7DDIhyphenhyphenpPU/s200/Wenzel+Portriat+16.jpg)
Bloomberg's chart should include Iran's Rial
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