walter russell mead peter berger lilia shevtsova adam garfinkle andrew a. michta
Feed
Features
Reviews
Podcast
Inflation Nation
Argentina: The Beginning of the End?

The day of reckoning seems to be dawning on the latest iteration of Peronist failure in Argentina. The continuing refusal by the government of President Cristina Fernandez de Kirchner to bow to market realities has put the country’s Central Bank in an impossible position, forcing it to pull the plug on support for the peso. The Central Bank has sold billions of dollars to shore up Argentina’s currency, but with an unending flood of inane currency controls and restrictions surging from Buenos Aires, the BCRA finally hung the peso out to dry. The FT reports:

The peso fell as much as 15 per cent in thin trading on Thursday after the central bank suddenly and silently removed its support. It recovered to close down about 10 per cent after the bank reappeared towards the close, selling about $100m to buy pesos, analysts said. […]

“That’s what happens in markets,” said Siobhan Morden, Latin America strategist at Jefferies in New York. “Pressure builds, and when the central bank backs away, everyone starts to panic.” […]

“It’s become clear that all those fingers in the dike are not enough,” Mr Porzecanski said. “The government is faced with either a further confidence-shattering loss of reserves or a further confidence-shattering devaluation of the peso. All the good options are gone.”

Nothing during Fernandez’s tenure inspires confidence that this government will do anything but take foolish measures that will hasten the fall.

This could be more than just another currency crisis. The foundations of Kirchnerismo could be beginning to crack.

Features Icon
Features
show comments
  • William Ockham

    What was it that someone said recently? Brazil is becoming Argentina, Argentina is becoming Venezuela and Venezuela is becoming Zimbabwe.

© The American Interest LLC 2005-2014 About Us Masthead Submissions Advertise Customer Service