Signs that Argentina’s catastrophic hyperinflation is now entrenched? The Central Bank of Argentina has announced the issuance of a new 2,000 peso note, to facilitate cash transactions. This new banknote currently represents an amount equivalent to just under 10 euros.
A new banknote issued in Argentina to accompany inflation
Argentina is one of the territories most heavily affected by inflation. In 2022, it reached a record of 95%unheard of since the early 1990s. The cost of living has doubled in the country, while the Argentine peso (ARS) continues to fall:
The price of the Argentine peso has been falling steadily in recent years
At present, One Argentinian peso is equal to 0.0049 euro. The depreciation of fiat currency and the increase in the cost of living make the use of cash more complex, hence the introduction of a new note.
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2000 peso bills
This 2,000 peso note will make it easier for people in Argentina to pay without having to use smaller denominations. So far, the biggest bill has been the 1,000 peso. The measure of course does not change anything for the savings of Argentinesbut the country’s Central Bank nevertheless presents this development in a positive light:
“As the process of digitizing payment processes progresses, this bigger cut will improve the operations of cash dispensers, tout while at the same time optimizing cash exchanges.»
To make a comparison, it is as if in Europe we decided to create a 1,000 euro note, whereas the highest note is currently that of 500 euros. This measure only catching up with a basic trendand it is possible to see in the future a note of 5,000 pesos issued by the central bank of Argentina.
In Argentina, the dollar has a big influence, by virtue of its relative stability. People use it to shore up their savings, rather than having them in a currency that is rapidly losing value. To counter this, the Argentine government recently announced a common currency project with Brazil. But this one will of course take time, and runaway inflation is unlikely to stop by then.
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Source: Central Bank of Argentina – Chart: TradingView
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