Just 2 months after having closed an agreement with the IMF, President Macri announced on 08/29/18 in a televised address that Argentina has asked for an early release of a $50 billion loan from the IMF ” to guarantee compliance with next year’s financial programme ” as crisis worsens and was trying to negotiate changes in terms as inflation and GDP targets are not going to be met this year. 

Macri said that in the past week there had been “expressions of a lack of trust in the markets” about Argentina and that “This decision aims to eliminate any uncertainty”. The Peso had already lost more than 40% of its value against the US dollar this year and inflation is rampant (over 30% per year).

After his speech, the Peso fell again to close at an all-time low of ARS 34.2 per US dollar. The next day, Argentina lived his “jueves negro” (black Thursday), where the US dollar continued his flight to exceed the historical threshold of 40 pesos (with a peak at 41.7) before the Central Bank raises in emergency its interest rate from 40% to 60% (the highest level in the world) to contain the devaluation.

For the first time in history, the Argentine peso is worth less than the Uruguayan. Everyday life is getting more expensive for Argentines, as the prices of many goods and services still bear a close relation to the US dollar. Furthermore, the combination of spiralling inflation and public spending cuts means wages are not keeping pace with prices, making most people poorer.

Other emerging markets such as Turkey and Brazil are also suffering from the devaluation of their currencies this year, but Argentina’s situation is particularly troublesome and will also have ripple effects for the neighbouring countries.