The Argentine peso has plunged in recent years amid continued concerns about its troubled economy. The USD/ARS exchange rate surged to an all-time high of $270, meaning the peso was nearly worthless. In fact, the black market exchange rate rose to almost $500.
Argentina’s IMF agreement
The Argentine peso may soften somewhat in the coming days, mainly for two reasons. First, the country is in talks with the International Monetary Fund (IMF). relief package. The IMF announced on Sunday that the deal would be revised in the coming days.
The IMF is reviewing a $44 billion loan to Argentina. These funds will provide a lifeline for this country when the country is in trouble. For example, the country faced its worst drought in years, causing more than $20 billion in exports.
The drought has forced the Argentine government to rely on agricultural imports, an unusual move for one of the world’s largest food stores.
A deal with the IMF would therefore provide some relief for the plummeting Argentine peso. The main challenge is that Argentina needs to raise about $2.6 billion by the end of this month to pay the IMF. It is unclear how the funds will be raised.
Argentina’s energy benefits
Another key piece of news that could help the Argentine peso is the energy sector.Argentina looks to get energy jackpot After the new pipeline is completed. The country will benefit from a new gas pipeline from Patagonia, which has the world’s second-largest shale gas reserves.
The pipeline will make Argentina a net exporter of energy for the first time in 13 years. The government expects the energy surplus to reach more than $18 billion by 2030. In the meantime, the pipeline will help reduce the amount the government spends on imports. The government expects to save $1.7 billion this year and $4 billion in 2024.
Still, the challenge for Argentina is that natural gas prices have plummeted in recent months. Additional production from Argentina could push prices down over the long term. In addition, ongoing currency restrictions may hinder investment in Argentina.
Other planned investments include the Nestor Kirchner Pipeline to San Jeronimo and to reverse the flow of northern Argentina. The latter pipeline was built to carry natural gas from Bolivia.
If Argentina reaches a deal with the IMF, I suspect the USD/ARS pair will pull back temporarily. A similar move was seen in the Pakistani rupee when it reached an agreement with the IMF.
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