The Argentinian peso was the most under pressure currency during the past year and the country’s finance may worsen still more yet.
Foreign exchange levels have plunged to such low levels that devaluation may be on the cards.
The peso has dropped to crisis levels after the government defaulted on loans taken out to underpin the economy.
Successive governments have wrongly gambled that lenders would take no action and accept lower repayments.
The result is dollar currency reserves are so low the government has little money left to buy imports, which is pushing inflation up past the 40% mark – and many observers suspect the government is not telling the whole truth about how prices are rising in a bid to contain panic buying that will hit the economy even harder.
Bolivar devaluation?
Another South American economy in crisis is Venezuela. Despite huge oil reserves, the government has announced devaluation of the bolivar several times but failed to follow with any action.
Inflation is running at 60% and rising. A general election is on the way and a change of leadership may see some political movement at last.
Generally, foreign exchange rates were reasonably stable in August, even if they may seem volatile locally.
The issue for expats moving from the States or Britain to other currency zones is a two-speed pull out of recession.
Whereas governments in Washington and London seem to have their recoveries under control, the Eurozone is still ploughing through the low growth and falling inflation.
Expat FX worries
Emerging markets, like Brazil, China and India are changing shape from producers to consumers, and as a result growth has stalled.
The likely effect is interest rates rising sooner rather than later in the US and UK, while those in other markets may need to stand still or even fall back a little to stimulate growth.
For British and US expats, their buying power is increasing when they leave home, but those converting salaries and pensions back to dollars and pounds are losing out.
Other poor performing currencies are in areas of strife and political uncertainty – like The Ukraine, Somalia, Syria and Iraq.
Another issue affecting minor currencies in countries producing raw materials like gold, copper and other metals is falling commodity prices. Places like Ghana, Mongolia and Zambia are feeling the melt down from lower exports of precious metals.
