Move on Zimbabwe dollar: these currencies are moving to the abyss too

The Zimbabwe dollar is well-known as the currency that collapsed a few years ago. Images of the worthless 10 trillion Zimbabwe dollar have become iconic over the years. Now, as the US dollar index (DXY) and crude oil prices rebound, other currencies in the developed and emerging markets are collapsing as well.

Argentina peso has collapsed

Let’s start with South America, where the Argentinian peso has plunged to a record low. The official USD/ARS exchange rate has soared to over 350 while the black market rate is much higher than that. As I wrote recently, the Argentinian peso has collapsed after years of currency printing and debt defaults.

Unfortunately, the situation will not get better any time soon. For one, the leading presidential candidate has vowed to dollarize the economy and ‘burn’ the central bank. As a result, many people and companies have moved to the safety of foreign currencies ahead of the election.

In Africa, the Nigerian naira crashed to a record low of  955 in the black market and to 760 in the official rate. The most populous economy in Africa is going through numerous challenges, including high inflation and a dollar shortage. Data published on Friday showed that the headline inflation rose to 25.8% in August as food inflation soared to 29.34%.

Nigeria’s inflation was rising even before the government decided to remove petrol subsidies that have existed for years. Today, Nigerians are paying about $0.81 per liter, the highest level on record. 

Watch here: https://www.youtube.com/embed/so2hlBtbNVY?feature=oembed

Turkish lira sell-off continues

Meanwhile, in Turkey, the lira has been in a strong freefall over the years. The USD/TRY exchange rate was trading at 26.98, 412% above the lowest level in 2019. It has soared by almost 2,000% in the past two decades.

The Turkish lira collapse is because of the lack of independence of the Central Bank of the Republic of Turkey (CBRT). Over the years, President Erdogan has insisted on low-interest rates even in periods of high inflation. The most recent data showed that the headline inflation soared to more than 50% in August.

Other currencies that are moving to the abyss are the Pakistani rupee, Kenyan shilling, and the Lebanon pound. Analysts believe that these currencies could crash further in the coming months as the US dollar index (DXY) jumped to $105 and crude oil has soared to over $90.

The post Move on Zimbabwe dollar: these currencies are moving to the abyss too appeared first on Invezz.