Argentina’s Peso Sorrow 🎻

by 13 Aug, 2019

Argentina’s Peso Sorrow

If you like cheap stocks, go to Argentina. The stock market’s running out of room to fall, and the peso is down the toilet. The country’s economy sat on weak foundations to begin with, meaning it couldn’t withstand yesterday’s surprise election result. Just a normal day at the office then for the Argentines. Thank heavens they have wine to fall back on!

Spare a thought for these South Americans who’ve endured nearly twenty years of economic decay, many blaming the International Monetary Fund (IMF). In reality, a toxic mix of nationalization and exchange rate meddling truly killed investors off, with the restoration job falling to the business-friendly, Mauricio Macri. He’s had his chance, and yesterday came the crunch moment of years of economic troubleshooting and monetary patch jobs. Unfortunately, the election didn’t go his way. With President Macri joined at the hip with the economy, it was head in hands for the markets too.

For some perspective, the peso lost a quarter of its value against the dollar! Usually, if a currency wiggles more than 1% in a week, that’s considered a major shift. As buying power evaporated, everyday living prices remained at normal levels, and now probably isn’t a good time to ask for a pay rise either! One look at corruption or inflation, and stocks plummeting by a third seems quite appropriate!  

On a lighter note, Argentina is the country behind 10% of the world’s flora, a ton of lemons, hordes of boron and lithium, and one heck of a lot of wine. The natural riches on its land lured in many foreign investors, and if it weren’t for a timely commodities boom, we might not have an Argentina at-all!

The fate of money in that country is out of investors’ hands. All of a sudden, the safest place feels like home for many American investors, second-guessing their emerging market plays! Where has internationally diversifying your portfolio taken you?

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