Why Financial Observers Cry for Argentina

Originally published by CNBC on August 30, 2018 Read the original article.

Is history repeating in Argentina?

The nation’s financial crisis here in 2018 is a reminder of what unfolded just after the start of the new millennium, which was around the time that the first edition of Robert Prechter’s Conquer the Crash published (2002).

In the book, Argentina is mentioned as a warning of what could happen in other nations under similar circumstances. Here’s one example:

In Argentina, the government continued to spend more than it took in until it went broke trying to pay the interest on its debt. In December 2001, it seized $2.3 billion dollars worth of deposits in private pension funds to pay its bills.

Let’s now review some current developments.

This is an excerpt from an Aug. 30 CNBC article headlined, “Argentina’s central bank hikes rates to 60% as the currency collapses”:

Argentina is struggling to cope with yet another financial crisis.

Investors are increasingly concerned Latin America’s third-largest economy could soon default as it struggles to repay heavy government borrowing. This comes after Argentina’s government unexpectedly asked for the early release of a $50 billion loan from the International Monetary Fund (IMF) on Wednesday [Aug. 29].

The Argentine peso crashed to record lows on the news. It saw steep losses in the previous session and collapsed another 15 percent to hit 39 pesos against the U.S. dollar on Thursday morning [Aug. 30].

The peso is down more than 45 percent against the greenback this year, exacerbating pre-existing fears over the country’s weakening economy while inflation is running at 25.4 percent this year.

On Thursday, the central bank said it was increasing the amount of reserves that banks have to hold, in a bid to tighten fiscal policy and shore up the currency. It hiked rates by 15 percentage points to 60 percent from 45 percent and promised not to lower them at least until December.

You can read the entire article by following the link below:

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