Out of pocket money, feeling the pain, and starting to think of China? The currency devalues by 54%, and the first big gift from Macri's administration arrives. As the saying goes, governing a large country is like cooking a small dish, so even reforms must be carried out slowly, after all, for a country, stability overrides everything.
However, Argentina's Macri goes against the grain, doing things in the most radical way possible. First, he drastically cuts down national institutions, and now he wants to fully embrace dollarization. However, dreams are beautiful, but reality is very bony. The peso plummeted by 54% that day, and inflation took off directly. It can be said that Argentina's economy has taken off again. Before shouting to embrace dollarization, and now that the economy is out of control, do you think of China again? The peso plummeted by 54%, but it wants to continue currency swaps, exchanging depreciated pesos for stable yuan? Should our country help or not with Macri's 180-degree turn?
A 54% currency devaluation, seeking China?
Currency is known as a symbol of a country's strength, but the currency of some countries is like a roller coaster. When the economy is stable, they want to hold onto the United States' legs, but when the currency devalues by 54%, they want to expand currency swaps with China, exchanging depreciated pesos for strong yuan?
As the saying goes, a new official takes office with three fires. Macri of Argentina can be said to have set fire directly upon taking office. First, he almost directly reduced Argentina's various institutions by half. If this is to improve institutional efficiency and reduce institutional bloat, it is still understandable.
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However, it is difficult to understand why Argentina's currency devalued by 54%. We know that in the current situation of the US dollar's interest rate hike, global currencies are basically very weak. Moreover, countries are continuously raising interest rates to cope with foreign exchange loss, and the purpose is to prevent significant currency devaluation, thereby causing foreign exchange loss.
Similar to this is Turkey's Erdogan. However, Turkey did not persist for long. But Turkey is not similar to Argentina, because as a European processing plant, Turkey can attract Europe's basic or industries through corresponding operations.
But what does Argentina have? And Argentina has always had a trade deficit. According to relevant data, Argentina's trade deficit reached $4.387 billion in the first half of this year.
In addition to the trade deficit, Argentina's foreign exchange reserves are now in danger. Because we all know that no one wants the paper in their hands. And the main factor of Argentina's economic instability is that the currency devaluation is too serious, leading to a large amount of capital being exchanged for dollars and fleeing abroad.Moreover, this year Argentina, facing a shortage of foreign exchange and an inability to pay its external debt, still used Chinese yuan to repay its loans. The purpose was to ensure the reserve of foreign currencies, thereby stabilizing Argentina's currency. However, Milei's first step broke this point, accelerating the devaluation of its own currency.
In the name of accelerating currency devaluation to speed up Argentina's trade exports and reverse the trade structure, can this really be achieved?
We all know that before Milei took office, he had already stated that he wanted to be close to the United States and stay away from China and Brazil. However, unfortunately, China and Brazil are among the top three trading partners of Argentina. In other words, Argentina wants to interrupt cooperation with its trading partners while also trying to expand its exports. Can this be achieved?
Does Argentina want to export everything to the United States? Don't forget that the United States is also an exporter of soybeans and crude oil, which means that the two countries are actually competitive in terms of trade structure. Moreover, the most important reason is that the United States is still raising interest rates, and its consumption capacity is already decreasing. So, is Milei saving Argentina? Milei is killing Argentina.
However, after the currency devaluation, capital is uncontrollable, and they think of China again? We know that the devaluation of the local currency will inevitably lead to capital flight, which will further accelerate the depletion of foreign reserves. Now, Argentina wants to borrow yuan to stabilize its economy, and it can only be said that Milei may be thinking a bit too much.
Moreover, the peso has already depreciated by 54%, and foreign capital is fleeing, but they think of the yuan swap. What was Milei doing early on? And we also made it very clear that cooperation is possible, but it must be based on a stable relationship between the two countries.
Cooperating with China is the future.
A gentleman does not stand under a dangerous wall, which is a choice that every person and every country will make. Seeking benefits and avoiding harm is also a choice for the country. However, the final result of being fickle will inevitably be to become a discarded piece.
We often say that a person cannot stand without trust, and the same is true for a country. For a country to cooperate with other countries, the most basic thing is to maintain trust. If there is no trust, then there is no country that dares to cooperate with it.
Even with the demographic dividend of India, many countries and enterprises will assess its trustworthiness when cooperating with it. After all, the failure of cooperation at most is a loss, and if trust is a problem, it is a loss of both principal and interest.And now, in Argentina, is its credibility really reliable? We know that Mille's stance is quite different from that of any previous Argentine administration.
Moreover, Mille shows an extreme pro-American attitude, while his performance towards his trade partners, China and Brazil, is quite average. Moreover, Brazil is still its neighboring country, so Mille's actions really need to be considered carefully.
After all, we can't be sure that he will cooperate on the first day and then suddenly turn his back on us the next day. After all, his idol is Trump. So overall, we still need to re-evaluate him.
The foundation is not solid, and the earth shakes. The foundation of China-Argentina currency swap is the relationship between China and Argentina, but in Mille's hands, the relationship between China and Argentina still needs to be considered.
Moreover, we know that in addition to Mille's attitude that changes at any time, Mille's policy stance will also lead to great changes in Argentina's domestic situation, which also needs to be considered.
The essence of China-Argentina cooperation is the consideration of the common interests of the two countries. Now Mille is also unclear about his own stance, and he is even less prepared for its consequences. What problems this operation will bring, we can't predict. Moreover, Mille's heart is in the United States, if the United States gives Mille a candy in the future, will Mille abandon us again?
So, Argentina still needs to think clearly, what is the choice of embracing the United States now? And if you want to cooperate with China, then return to the track of China-Argentina cooperation, we don't accept such fickleness. After all, the Renminbi is not blown by the wind.
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