Economics

What is the currency of Argentina?

The official currency of Argentina is the Argentine peso.

Argentina is a South American country that uses the peso as its currency. The Argentine peso is abbreviated as ARS and has a symbol similar to the dollar ($) sign. The Argentine peso is divided into 100 sub-units called centavos. The Central Bank of Argentina is responsible for producing and releasing currency in the country. The Argentine peso currently exists in both coinage and bill form. The coins are in denominations of 1, 5, 10, 25, and 50 centavos while bills come in denominations of 2, 5, 10, 20, 50 and 100 pesos. The bank of Argentina seeks to increase the denominations of the currency released into circulation by introducing 200, 500, and 1000-peso notes. The notes are printed with the Argentinean natural environment in mind as they include animals and the physical environment. The homer, Argentina’s national bird, is on the 1000-peso note.

History

The currency of Argentina has evolved over the centuries. In the early 19th century, Argentina used Spanish coins called real. The 8-real coins were made of silver. Gold and silver pesos replaced the real towards the end of the 19th century. Gold pesos existed in denominations of 2 and 5 while silver ones were in denominations of 5, 10, 20, and 50. During the same period between 1881 and 1956, copper coins in denominations of 1 and 2 centavos were introduced. The peso ley, introduced in the 1970s, replaced the existing peso. The last peso, exchanging at a rate of 1 peso for 1 USD, was introduced in 1992. Inflation was the major factor contributing to the development of new currencies including the introduction of the convertible currency.

Exchange Rates

The exchange rates for the Argentine Peso are subject to the ever-changing market in South America and within the county. Inflation in Argentina and the external economic crisis over the years has affected the value of the peso, sometimes falling close to devaluation. The worst economic crisis in Argentina occurred in 1999, which led to the Argentine peso devaluing by about 80%. The value of the Argentine peso against the US dollar has been declining over the years after the expiration of the US-Argentina agreement on the fixed exchange rate between the dollar and the peso. Currently, the exchange rate between the peso and the US dollar is about 16 pesos for 1 USD. With the increasing inflation rates, the peso is likely to keep depreciating.

Inflation

Argentina has been battling with inflation since the late 20th century due to high government spending leading to foreign debt. Increasing inflation led to the devaluation of the currency and defaulting on foreign debt. In the 1980s, inflation led to the replacement of the previous peso with a new currency to help reduce the inflation created during the previous dictatorial regime. However, the situation in Argentina kept declining. Political regimes have tried to improve inflation, which currently stands at around 20%. Some economists forecast the exhaustion of Argentina’s foreign reserves if measures to control the inflation are not developed.

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