Exchange rate systems- Argentina’s hyperinflation
and exchange rate crisis (1975–1990)
Background
Between 1975 and 1990, Argentina entered a deep economic
crisis:
● Hyperinflation: By 1989, inflation hit 5,000%, making
goods like bread and fruit 20 billion times more
expensive than before.
● Negative growth: GDP growth was poor or negative,
causing unemployment to surge, real wages to collapse
to half their 1974 levels, and poverty to reach 50%.
● Quantitative easing (QE): In a last-ditch attempt to
stimulate growth, Argentina printed billions of extra
australs.
how hyperinflation and QE led to currency depreciation.
hyperinflation.
1.Inflation in Argentina massively exceeded that of its
trading partners.
2. This made Argentinian goods uncompetitive — foreign
consumers bought fewer exports.
3. Less demand for Argentinian exports meant less demand
for the austral.
4. Less demand for the currency meant a sharp
depreciation of its exchange rate.
quantitative easing
and exchange rate crisis (1975–1990)
Background
Between 1975 and 1990, Argentina entered a deep economic
crisis:
● Hyperinflation: By 1989, inflation hit 5,000%, making
goods like bread and fruit 20 billion times more
expensive than before.
● Negative growth: GDP growth was poor or negative,
causing unemployment to surge, real wages to collapse
to half their 1974 levels, and poverty to reach 50%.
● Quantitative easing (QE): In a last-ditch attempt to
stimulate growth, Argentina printed billions of extra
australs.
how hyperinflation and QE led to currency depreciation.
hyperinflation.
1.Inflation in Argentina massively exceeded that of its
trading partners.
2. This made Argentinian goods uncompetitive — foreign
consumers bought fewer exports.
3. Less demand for Argentinian exports meant less demand
for the austral.
4. Less demand for the currency meant a sharp
depreciation of its exchange rate.
quantitative easing
