Argentina Studies Scrapping Its Peso
Argentina said Thursday it’s studying the idea of scrapping its currency and replacing it with the U.S. dollar, to help shield the nation from being rocked by currency crises such as Brazil’s.
Argentine officials first met with the U.S. Federal Reserve and the Treasury last July to discuss the move, which could be a first step in eventually using the dollar hemisphere wide, said Central Bank President Pedro Pou.
An agreement with Argentina, which in 1991 began pegging its peso’s value directly to the dollar, would take years to hammer out.
Argentina could fall into recession this year because of Brazil’s devaluation last week, as interest rates soar across the region. By adopting the dollar as its own currency, Argentina conceivably could permanently protect itself from Brazil-style devaluations and the attendant problems.
The U.S. Treasury said it was aware of Argentina’s interest in using dollars, but hasn’t begun any formal talks on how to do it.
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