Bloomberg is reporting that Argentina may ease its defense of the peso, and take a one time devaluation to $3.80 per dollar from $3.208 today. (It’s already slid 5 percent since August 1.) They had originally predicted that the government may simply let it fall through gradual depreciation, but the new measure may come up as a result of the current world financial crisis and depleting federal reserves.
While this may seem like a good thing for those of us with foreign currency, it would also most likely mean a continuing rise in inflation. Not good for any of us in Argentina.
– Argentina May Devalue Peso 16 Percent, JPMorgan Says[Bloomberg]
UPDATE (10/24/08): The fall keeps happening as the government is unable to keep up, even with heavy dollar selling.
– Argentine Peso Drops to Almost Six-Year Low Amid Global Turmoil [Bloomberg]