MARK BARNES: Argentina reminds all emerging markets there is no short cut to economic health
Argentina raised interest rates to 60% last week in an attempt to shore up the peso. It will prove to be futile. Once the numbers get that far off the chart, a country must concede that it’s not the right medicine for the disease. The peso has already lost half of its value against the dollar in 2018, and the rout is probably not over yet. The latest slide was because of a plea for a faster than planned drawdown of the $50bn IMF bailout ($15bn has already been accessed, $35bn is still to follow). Far from assuring the markets, the request has created even more panic. I would have thought that the outcome of that outcry would be obvious. If the patient shouts out to the nurses’ station that he’d like more medicine before the next dose is scheduled, it is abundantly clear that he’s worse off, not better. Either that or the prescribed dosage was not right in the first place. I suspect that, in the case of Argentina and any such parallel situations, it’s a bit of both. Interest rates at...
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