BANKNOTES OF ARGENTINA
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Monetary History of Argentina
At the beginning of the 20th century, the Argentine
peso was one of the most traded currencies in the world. However, throughout the
century, the economy collapsed several times, and the country experienced
periods of inflation and hyperinflation that led to changes in the system.
Peso before 1826
The peso was a name often used for the silver Spanish 8 reales coin. Following
Independence, Argentina began issuing its own coins, denominated in reales,
soles and escudos, including silver 8 reales (or soles) coins still known as
pesos. These coins, together with those from neighbouring countries, circulated
until 1881.
Peso Fuerte 1826–1881
In 1826, two paper money issues began, denominated in pesos. One, the peso
fuerte ($F) was a convertible currency, with 17 pesos fuertes equal to one
Spanish ounce (27.0643 g) of 0.916 fine gold. This was changed in 1864 when the
rate dropped to 16 pesos fuertes per gold ounce.[citation needed] It was
replaced by the peso moneda nacional at par in 1881.
Peso Moneda Corriente, 1826–1881
The peso moneda corriente ($m/c) was also introduced in 1826 but was an
inconvertible currency. It started at par with the peso fuerte, but depreciated
and was replaced in 1881 by the peso moneda nacional at a rate of 25 to 1.
Peso Moneda Nacional, 1881–1969
Although the Argentine Confederation issued 1, 2 and 4 centavos coins in 1854,
with 100 centavos = 1 peso = 8 reales, Argentina did not decimalize until 1881.
The peso moneda nacional (m$n or $m/n) replaced the earlier currencies at the
rate of 1 peso moneda nacional = 8 reales = 1 peso fuerte = 25 peso moneda
corriente. Initially, one peso moneda nacional coin was made of silver and known
as patacon. However, the 1890 economic crisis ensured that no further silver
coins were issued.
Peso Oro Sellado, 1881–1929
The peso oro sellado was a convertible paper currency equal to 1.4516 grams of
fine gold.
Peso Ley, 1970–1983
The peso ley 18.188 (called simply the peso ley), replaced the previous currency
at a rate of one peso ley to 100 pesos moneda nacional.
Peso Argentino, 1983–1985
The peso argentino ($A), replaced the previous currency at a rate of one to ten
thousand. The currency was born soon after the arrival of democracy. However,
soon after it lost its purchasing power too after a number of devaluations which
ended up with its substitution by a new currency called Austral in June 1985.
Austral, 1985–1991
The austral (the symbol was an uppercase A with an extra horizontal line),
replaced the peso argentino at a rate of one austral for one thousand pesos.
During the period of circulation of the austral, Argentina suffered from
hyperinflation. The last months of President Raul Alfonsín's period in office in
1989 saw prices move up constantly (200% in July alone), with a subsequent fall
in the value of the currency. Emergency notes were issued (worth 10,000, 50,000
and 500,000 australes) and provincial administrations issued their own currency
for the first time in decades. The value of the currency was stabilized soon
after President Carlos Menem was elected.
Peso Convertible, 1992–present
The peso replaced the austral at a rate of one to ten thousand. It was also
referred to as peso convertible since the international exchange rate was fixed
by the Central Bank at one U.S. dollar to one peso, and for every peso
convertible circulating, there was a U.S. dollar in the Central Bank's foreign
currency reserves. The end result of this replacement was that one peso would be
worth 10,000,000,000,000 pesos moneda nacional today. However, after the
economic debacle of 2001, the fixed exchange rate system was abandoned. Since
January 2002, the exchange rate fluctuated, up to a peak of four pesos to one
dollar (that is, a 75% devaluation). The exports boom then produced a massive
inflow of dollars into the Argentine economy, which helped lower their price. On
the other hand, the current administration has publicly acknowledged a strategy
of keeping the exchange rate between 2.90 to 3.10 pesos per U.S. dollar, in
order to maintain the competitiveness of exports and encourage import
substitution by local industries. When necessary, the Central Bank emits pesos
and buys dollars in the free market (sometimes large amounts, in the order of 10
to 100 million US Dollars per day) to keep the dollar price from dropping, and
had amassed over 27,000 million US Dollars in reserves before the 9,810 million
US Dollars payment to the International Monetary Fund in January 2006.
Note that the highest valued peso banknote is the AR$100, worth only about
US$33. Prices in Argentina are lower than those in the United States in terms of
purchasing power parity, so there is little need for higher valued banknotes.
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Page created: 21 March 2007
Last Update: 18 April 2007
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