Argentina Enters the Endgame

Is the beleaguered South American nation in the early stages of hyperinflation?

Last Monday, in a shocking development the Argentine peso collapsed 20% against the dollar after the central bank announced a currency devaluation and a hike in interest rates from 97% to 118%. The situation there is deteriorating by the day, as the once-prosperous country is beginning to suffer from a currency and inflation crisis, all the while its reserve balances are dwindling.

The crisis is accelerating, with black and blue market rates ripping to a 100% premium over spot FX market, demonstrating a very strong demand for physical cash. Month-over-month inflation is now soaring to 12%, and the crisis is giving no signs of stopping. 

Last week, my parents were traveling through central Argentina- they informed me that everyone was begging for dollars, even for the smallest of transactions, at a rate of 530 pesos per dollar. 48hrs later, it soared to 600. On Wednesday, August 16th- the rate went parabolic, ripping to 770.

The dollar shortage grows. And Argentina, after decades of kicking the can, finally has to pay the piper, with QE Infinity here at last. Let’s dig in.