Bitcoin All-Time High in Argentine Pesos

The Argentine peso is losing ground to Bitcoin as a store of value, according to recent market data. As Bitcoin prices continue to rise, measured in pesos, they have reached a new all-time high of approximately 394,000 pesos. This surge in Bitcoin’s value is partly due to the fear that the Argentine peso is on a path to further losses, even after the International Monetary Fund approved the use of its funds for the Argentine central bank to intervene in the currency. This is causing both local and foreign investors to dump peso assets.

Although the incumbent President Mauricio Macri has gained investors’ confidence with his response to the crisis, the potential return of previous president Cristina Fernández de Kirchner to office has introduced a “democracy discount” to the peso. This has created concerns amongst foreign investors, who fear a return to unorthodox policymaking. While Mrs Fernández is only running as deputy to presidential candidate Alberto Fernández, some fear her influence could still be significant.

Despite Argentina’s sky-high interest rates of around 70 per cent, which make the peso attractive to investors who want to benefit from interest rate differentials by selling low-yielding currencies and buying high-interest rate units, the currency is suffering more than the Turkish lira. This is due to its challenging electoral dynamic and slowing global growth, as well as a strengthening dollar. Columbia Threadneedle stopped trading the peso in April this year as election risks intensified, while Amundi analysts have warned of a possible currency run in the short term.