Argentina currency plummets as pound hits 29-month high

Photo: Proimos

The peso plunged 11 per cent to an official rate of eight pesos to the dollar on Thursday 23rd January, as the bank gvae up supporting the weak currency. Indeed, inflation has soared to 25 per cent, reports the BBC, prompting investors to lose confidence in the economy, which, in turn, has impacted the peso - and sent investors flocking to the US dollar instead.

The dollar has had a tough week too, as the British pound soared to a 29-month high against its cross-Atlantic counterpart. Sterling has been buoyed significantly in recent months by strong economic growth, with falling unemployment nearing the Bank of England's 7 per cent threshold to raise interest rates.

Confidence in the UK pushed up the pound against the euro as well, creating favourable conditions for Brits looking to buy property overseas in destinations such as Spain and France.

Argentina's looming financial crisis therefore comes as good news for the US currency, with Argentines turning to their neighbouring coin as a stable place to stash their cash.

The Turkish lira has also plummeted to record lows, again creating ideal opportunities for Brits looking to invest in the country's strong real estate market. The weakening of another emerging market, though, has also boosted demand for the US dollar, pushing it back against other currencies. Indeed, the US dollar has now moved away from a three-week low against the euro, notes Currency News.

In Argentina, meanwhile, the government (after placing a limit on online shopping this week) has allowed Argentines to buy dollars "in proportion to their income", reports Bloomberg, while a 35 per cent redeemable tax on buying foreign currency has been cut to 20 per cent. Nonetheless, many are still turning to the black market, trading as much as 13 pesos a dollar rather than the official rate of 8 pesos.