The Argentine peso appears to be feeling the aftershock effects related to the general political and economic instability in the region due to the crisis in Brazil. This week the Argentine peso dropped 19 centavos against the dollar. Just last week, the peso suffered a dramatic decrease in relative value from AR $15.9 to AR $16.27 against the US dollar as the market closed. This week, the market reopened with the peso valued at AR $16.41 against the dollar and this jump has some experts wondering just how bad Brazil’s political crisis will effect things at home.
Mostly to blame the economic situation in Brazil, which after showing initial gains was thrown into uncertainty after active corruption charges were filed against current President Temer, who rose to office after the impeachment of his predecessor, Dilma Rousseff. After consecutive allegations regarding bribes and corruption along with the president allegedly allowing hush money payments to be paid to disgraced politician Eduardo Cunha, it is very possible that Temer, along with members of his cabinet, will have to step down from office.
Brazil is one of Argentina’s most important trade and diplomatic allies — so when Brazil finds itself in economic trouble so does Argentina. It’s not clear how long or just how significant Brazil’s political and economic crisis will be, but local experts and policy makers are holding their breath as they watch crisis unfold to the north.