ARS - Argentine Peso

History of Argentine Peso (ARS)

In 1813, Argentina began issuing its own currency called the Real Argentina, which consisted solely of metal coins. 

In 1820, banknotes were introduced, and in 1881, the Real Argentina was replaced by the Peso at an exchange rate of 2 Real Argentina for 1 Peso. 

In 1985, the Argentine government withdrew the Peso to combat inflation, replacing it with the Austral as the official currency. However, due to economic failure and hyperinflation, Executive Order No. 2128 was enacted to restore the Peso’s value at an exchange rate of 1 Peso for 10,000 Australs. 

In 1992, a new currency, the peso was introduced, known as the peso convertible, as the Central Bank fixed its exchange rate at 1 peso to 1 U.S.

Subsequently, the Peso experienced severe devaluation in 2001, with the ARS/USD exchange rate dropped to four pesos equals one dollar. In 2008, proposals for redesigning the currency were presented, which included adding the image of Eva Perón and replacing Julio Argentino Roca's image with that of Juana Azurduy on the 100 peso bill. 

Argentine Peso denominations

Both coins and banknotes are being circulated in Argentina, featuring historical figures and important symbols of the country. The Argentine Peso denominations are as follows: 

Argentine Peso coins

• 1 centavos (not in use)

• 5 centavos

• 10 centavos

• 25 centavos

• 50 centavos

• 1 peso

• 2 pesos

• 5 pesos

• 10 pesos

Argentine Peso banknotes

• 5 pesos

• 10 pesos

• 20 pesos

• 100 pesos

• 200 pesos

• 500 pesos

• 1,000 pesos

Exchange rate history of ARS to USD

Throughout its history, the exchange rate of ARS to USD has been marked by periods of both stability and significant devaluation, reflecting Argentina’s recurring economic challenges. The changes are most visible from the year of 1992.

• From 1992-2001 (peso convertible era): Due the hyperinflation in the late 1980s, Argentina introduced the peso convertible in 1992, pegged at 1 ARS = 1 USD. This fixed exchange rate is backed by US dollar reserves. Towards to the end of 2001, one peso convertible of 1992 was equivalent to 10 trillion pesos moneda nacional of 1970.

• 2002 (Currency Devaluation): In 2001, the government decided to let go of the 1:1 peg, allowing the peso to float freely. This led to a significant devaluation, with the exchange rate reaching around 3 ARS to 1 USD by the end of 2002.

• 2003-2010 (Gradual Depreciation): Following the crisis in 2001, the ARS continued to depreciate gradually. By 2010, the exchange rate reached around 4 ARS = 1 USD.

• 2011-2015 (Accelerating Depreciation): With rising inflation and economic uncertainty, the peso's value began to fall more rapidly. By 2015, the official exchange rate was about 9 ARS = 1 USD.

• 2016 (Floating the Peso): In 2015, With currency controls being lifted, the peso floated freely, resulting in the devaluation of peso at 14 ARS = 1 USD.

• 2017-2018 (Sharp Depreciation): Argentina encountered another financial crisis, resulting in a significant drop in the peso's value. By the end of 2018, the exchange rate reached around 39 ARS to 1 USD.

• 2019-2021 (Further Devaluation): Political instability continued to weaken the peso. By the end of 2020, the exchange rate was about 85 ARS = 1 USD, and by mid-2021, it crossed 100 ARS = 1 USD.

• 2022-2024 (Ongoing Decline): By early 2024, the official exchange rate had surpassed 350 ARS = 1 USD, with a black market rate significantly higher.

Factors influencing Argentine Peso’s value

The Argentine Peso (ARS) has faced considerable volatility due to inflation, sparking extensive discussion about the country's economy. Over time, the Peso has significantly depreciated against major foreign currencies like the USD and EUR. A combination of complex economic and political challenges, along with high inflation, has led to the Peso's weakened value. The details how these factors can affect the peso’s value are as follows:

• High inflation: Argentina has been dealing with prolonged severe inflation for many years, which has weakened the purchasing power of the Peso, leading to a sharp decline in its value in the foreign exchange market.  

• Monetary and fiscal policies: The Argentine government has implemented price controls, interest rate caps, and printed money to cover budget deficits. As a result, the money supply has increased significantly, leading to inflation and the devaluation of the Peso.  

• Public debt and relationship with the International Monetary Fund (IMF): Argentina has a long-standing history of significant public debt and reliance on financial assistance from the IMF. Multiple debt restructurings have increased economic pressure and reduced confidence among international investors.  

• Foreign reserves: Argentina has experienced liquidity crises when central bank’s foreign currency reserves dwindled, causing the Peso to lose significant value.  

• Export commodity prices: Argentina is heavily reliant on agricultural exports, particularly soybeans. When these commodity prices fluctuate, the Peso is also affected.  

• Foreign exchange controls: The Argentine government has implemented currency controls and limited foreign exchange conversions, resulting in reduced transparency and causing the Peso to trade at a lower value on the black market compared to its official rate.

Argentine Peso (ARS) is facing numerous challenges in maintaining its value against strong foreign currencies.  The ARS peso clearly reflects Argentina's highly volatile economic situation in the international market.