Patience is an essential trait in investors’ character, but if a situation heats up and risks increase, traders would rather lose their cool than their money. They desert markets like rats leaving a sinking ship. Currently, one of such deserted vessels is the Argentine market.
The country’s economy is in dire straits. The first bailout package of USD 15 billion provided by the IMF is already spent. Problems are growing like a snowball. An economic slowdown caused a crash of the Argentine peso, which, in its turn, resulted in acceleration of inflation. These factors prompted investors to leave the country’s market. Indeed, the situation is close to disastrous, as the president of Argentina begged the IMF for help. Mauricio Macri asked the fund’s officials to speed up the process of providing the second tranche of an approved USD 50 billion credit. Amid that, the national currency is going into free fall. The Argentine peso has been showing the worst performance among other currencies so far this year. It hits new record lows all the time, and the downtrend seems to be endless. Neither interventions of the central bank, nor a massive rate hike to 45% can prevent the Argentine peso from extending losses.
Under such difficult conditions, the currency reserves of the country have almost emptied out. Currently, the Argentine economy totally depends on the exterior financial aid. However, Argentina got used to defaults: it has already experienced eight financial meltdowns, two of which occurred this century. The country’s economy has been suffering from depression for fourteen years already.
