Argentine 1,000-peso banknote has the lowest purchasing power among 10 countries, says study

The thousand-peso note Argentina has the lowest purchasing power compared to the highest denomination banknotes of ten economies in the Latin America according to a survey by the Economic Research Institute of the Córdoba Stock Exchange.

The study was carried out with the highest value banknotes in circulation in Argentina, Brazil, Peru, Colombia, Mexico, Paraguay, Uruguay, Venezuela, Bolivia and Chile. In the Brazilian case, the selected one was the bill of R$ 200 launched in 2020.

The banknote values ​​were then converted into dollar considering the exchange rates at the end of June in each country. Therefore, the highest value is the Peru where 200 soles equals US$ 53.

Brazil was in fourth position, behind also the Mexico It’s from Uruguay with R$ 200 equivalent to US$ 38.3.

The last three positions were occupied, respectively, by the Venezuela where 100 bolivars are equivalent to US$ 18.1, at Paraguay with 100,000 guaranis corresponding to US$ 14.6, and by Argentina.

In the Argentine case, which has six exchange rates in use, the institute took into account both the official rate and that used in the parallel market, and in both cases the lowest value was recorded.

At the official exchange rate, one thousand Argentine pesos are equivalent to US$ 7.7. In parallel, at US$ 4.3.

The thousand-peso note was launched in Argentina in 2017, and since then it has lost 87% of its purchasing power considering the official exchange rate, and 93% in the parallel. In November of that year, it was $60.

The institute points out that during the 1990s, the most widely circulated note in Argentina, 100 pesos, was equivalent to US$ 100. Since then, there has been a devaluation against the US currency.

The study attributes the movement to “persistent inflation, which deteriorates the purchasing power of the Argentine peso and negatively impacts the purchasing power of families with fixed incomes, that is, less and less goods and services can be purchased with the same currency unit.” ”.

One of the products used in the comparison between countries was the amount of 330 ml bottles of Coca-Cola or Pepsi that could be purchased using the higher value banknote.

In Peru, it would be possible to buy 80 bottles. In Brazil, 39, the third largest number. In Argentina, it would be possible to acquire 8, the smallest quantity among all countries.

The number of hamburger combos in fast food chains that could be purchased was also measured, considering the menus of McDonalds and Burger King.

Peru also leads the list, with a note of 200 sols and can buy up to 11 combos. Brazil maintained the third position, with 7, and Argentina the last, with 2, tied with Venezuela.

The institute also notes that “the rapid rise in prices and the erosion of the purchasing power of the local currency show that from 2017 until today, in six of the countries analyzed (Bolivia, Chile, Colombia, Mexico, Paraguay and Peru), the average annual inflation was less than 5%.

In Brazil, the average was 6%, and in Uruguay, 9%. In Argentina, the annual average was 47%, second only to Venezuela, with 7,321%.

In 2022, Argentine inflation reached the highest value in 30 years of 60.7% in the 12-month period ended in May.

According to the National Institute of Statistics and Census (Indec), the highest rise in the month was in the health sector (6.2%), especially due to the change in drug prices. The second biggest increase was in the transport sector (6.1%), due to the increase in fuels.

Besides the inflation , the Argentine peso has reached a record devaluation against the dollar. The country is experiencing a withdrawal of foreign investment linked to both domestic and external risk factors, leading to devaluation.