|Posted by George Freund on May 10, 2018 at 12:00 AM|
Interest rates have been raised to 40 percent, with the peso falling sharply against the US dollar
ARGENTINA has turned to the International Monetary Fund (IMF) for a multi-billion pound rescue package, prompting fears throughout South America that the country’s economy is once again in crisis.
The talks come 17 years after Argentina defaulted on its debts and 12 years since it severed ties with the IMF.
Last week the country’s central bank announced interest rates were being raised from 33.25 percent to 40 percent - as the 12-month inflation rate hit 25.4 percent, above its 15 percent target.
Yesterday, the peso traded at 22.4 against the dollar, down by two percent, after falling to an all-time low of 23.1. However, since the start off the year, it has slumped by a fifth against the US currency.
In an address to the nation, Argentine President Mauricio Macri said the country was suffering from high oil prices and the expectation that US interest rates would soon rise, adding the IMF aid would “strengthen growth” and help avoid crises of the past.
This is not a good sign. As the contagion spreads, other nations will feel the wrath of the hands of fate. Perhaps the orchestrators of this might be the last man standing, but they may fall too. An Egyptian billionaire put half his wealth in gold because he thought we were on the verge of a financial collapse.