Summary

News out of Argentina has gone from bad to worse. Before Thursday, the Argentine peso was down around 10% against the USD through August, and nearly 40% through 2018. Even then there were questions being asked about whether the $50 billion IMF financing mechanism that had been agreed to would be enough to cover the country’s substantial short-term financing requirements ($82 billion over the next two years).

Then Thursday trading hit, slashing another 12% from the peso’s value despite a dramatic rate hike of 15%, which brought the central bank’s interest rate to a towering 60%. The rate has more than doubled since April 2018, and Argentina now has the highest interest rates in world.

The Macri administration has been plunged into a perfect economic storm. Will it be able to weather it with more ‘gradual austerity,’ or are people already fed up?