Are you sweating over high interest costs? Give a thought to condominium owners in Argentina. They are now suffering through a key interest rate of 91 percent and an imminent risk that the country will be forced into currency devaluation.
The people of Argentina are sober when it comes to periods of economic crisis. Now, however, one is experiencing a situation which, even by Argentinian standards, is extremely troubling.
When the Swedish Riksbank, and Riksbank Governor Erik Thedéen, were questioned for raising the key interest rate by 50 points to 3.50 percent a week, borrowers in Buenos Aires or other Argentine cities would probably have received such a message with joy.
There, the Riksbank’s counterpart raised the policy rate this week by ten percentage points to a dizzying 91 percent compared to 47 percent a year ago – this at the same time as inflation in March was 104.3 percent, the highest figure in over 30 years.
The peso has plummeted in value
The situation has caused the Argentine peso to plummet in value against the US dollar.
At the same time, Argentines who want to trade in physical notes are forced to walk around with huge bundles of notes, as the note with the highest denomination is now only worth two dollars compared to $21 four years ago.
Drought worsens the situation
The economic meltdown the country is experiencing has meanwhile been further exacerbated by a severe drought that has hit the country’s agriculture, traditionally the most important export sector for the South American nation.
The situation is now considered so serious that the threat of a devaluation of the peso may be about to become a reality, something that President Alberto Fernandez has personally said will never happen.