75 basis points in interest rate hikes have been a single maximum interest rate hike in the Federal Reserve in the past 30 years, but in Argentina, it is a "small dish" -On May 15th local time, Argentina urgently announced the 600 basis points of interest rate hikes!The benchmark interest rate directly raised from 91%that was already exaggerated to 97%!
Facing the high inflation situation, the Argentine Central Bank has raised interest rates many times this year.Among them, it raised interest rates once in March and 2 times in April. The 600 basis interest rate hikes in May raised the benchmark interest rate from 75%at the beginning of the year to 97%.
The Bulletin released by the Central Bank of Argentina on the 15th stated that the main purpose of interest rate hikes was to respond to the situation of high domestic inflation and stabilized financial markets.
According to the data released by the Argentine National Statistics and Census Research Institute on the 12th, in April this year, Argentina's inflation rate reached 8.4%, and the cumulative inflation rate in the past 12 months increased to 108.8%, the highest level since 1991.According to data from the International Monetary Fund (IMF), at present, Venezuela and Zimbabwe are the world's only two countries in the world with inflation rates higher than Argentina.
Specifically, data from the Argentine National Bureau of Statistics show that in April, the price of "clothing and shoe" increased the largest price, reaching 10.8%; "food and non -alcoholic beverages" ranked second with 10.1%.Other parts with large increases include restaurants and hotels (9.9%), home equipment and maintenance (8.6%).
Since last year, Argentina has encountered historic droughts. The exports of soybeans, corn and wheat crops have been impacted. The fragile economic situation has worsened the snow. The foreign exchange reserves have been consumed, which has greatly depreciated the Argentine Peso and further pushed up prices.
"This time, interest rates may not be completely cured of their inflation." Jiang Shixue, a special professor of Shanghai University and director of the Latin American Research Center, said that the inflation of Latin American countries such as Argentina is a structural issue, that is, supply cannot keep up with demand demand.growth of.For example, Argentina needs to export a large amount of beef and food to obtain foreign exchange income, but exports will reduce the supply of domestic markets, resulting in high inflation rate.
Many people expect that Argentina will fall into decline this year.The International Monetary Fund predicts that Argentina's growth rate in 2023 was 0.2%.The Oxford Economic Research Institute predicts that the GDP of Argentina will decrease by 1.6%, which is the worst prospects among major Latin American economies.
In addition to high inflation, the loss of foreign exchange reserves and debt sustainability are also weakening the economic vitality of Argentina.Especially in the context of external impacts such as the Federal Reserve's interest rate hikes, the "lesion" of Argentina's economy has also been magnified.
"Argentina is a country that is trapped in a triple predicament."
Camargo said that in order to allow Argentina's economy to develop forward, three problems must be solved: severe US dollar shortages, debt sustainability problems and high inflation.
Since this year, Argentine Billosso has been selling in the foreign exchange market, and Argentina's Disso has depreciated by more than 30%of the US dollar.At the same time, in the context of intensive exchange rates and financial instability, in the parallel black market transaction, peso for the US dollar exchange rate is close to the 500 mark.
In response to the crisis of foreign exchange depreciation, Argentina intervened in the market, but this also led to the continuous consumption of its foreign exchange reserves.Data show that the country's current foreign exchange reserves have a total foreign exchange reserve of less than 34 billion US dollars, but most of them are locked in assets with poor liquidity -such as gold, credit swap with international liquidation banks, and Argentina personal savings accountsThe dollar.
According to the consulting company 1816
Economia &
Estrategia estimates that only about $ 1 billion in international reserves with good liquidity in the hands of Argentina's central banks.When Argentina continued to struggle with historic drought climate and the upcoming economic recession, the "drought" of foreign exchange reserves undoubtedly further increased risk.
At the same time, the huge amount of debt and fiscal deficit that Argentina bears it.Argentine President Alberto (Alberto
Fernandez tried to increase foreign exchange reserves by forcing the US dollar to flow into the central bank account and accepting the IMF funds, but these measures have been very effective.
In late March last year, the IMF executive board meeting passed the re -financing plan for Argentina debts to approve the use of special withdrawal equivalent to $ 44 billion, and provides loans to Argentina in stages to promote the country's economic development and ensure that it can be available.Continue to repay debt.
IMF announced in early April this year that the fourth review of Argentina has been completed, allowing it to pay about $ 5.4 billion immediately.During this review, the IMF once again relaxed the requirements to reduce the level of net reserve accumulation or cash reserves that the central banks needed to establish this year from $ 4.8 billion to $ 2.6 billion.
However, as Fernandez announced that he would not participate in the presidential election that will be held in October, the follow -up progress of Argentina and IMF for the US $ 44 billion loan plan was also "confusing."Can Argentina get out of the current economic crisis?Everything has to be seen.
