Thursday, August 30, 2018

Argentina Lifts Interest Rates to World High 60% But Currency Still Collapses

By Robert Wenzel

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%

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.

Robert Wenzel is Editor & Publisher of

1 comment: