The Argentine peso (ARS) is the official currency of Argentina. It is subdivided into 100 centavos and its ISO 4217 code is ARS. The peso has a long and turbulent history reflecting Argentina’s economic ups and downs over the past century.


The peso is an iconic currency in South America and its decline over the decades reflects Argentina’s perpetual cycle of economic crises. However, the peso remains a source of national pride and identity for Argentines. Understanding the origins and factors impacting the ARS can provide forex traders valuable insights for trading this exotic currency pair.

History of the Argentine Peso

The history of the Argentine peso traces back to the monetary reforms of 1881, when Argentina pegged its currency to the gold standard following a period of monetary instability. The convertible paper peso replaced the peso fuerte and peso moneda nacional currencies.

The Argentine peso remained pegged to gold until 1914 when convertibility was suspended due to World War I. After a brief return to the gold standard in 1927, Argentina abandoned it completely in 1929 along with most other countries suffering from the Great Depression.

In the postwar era, the peso initially held its value, trading at parity to the US dollar. But repeated bouts of hyperinflation in the late 1980s and early 1990s led to the peso’s precipitous decline. The massive devaluations forced Argentina to introduce a new currency, the austral, in 1985 and then the peso convertible in 1992 pegged 1:1 to the US dollar.

The convertibility law finally ended the hyperinflation crisis but could not prevent the 1998–2002 recession which ultimately led to the peso’s detachment from the dollar and devaluation by 75% in 2002. Since then, the peso has continued to lose value with bouts of high inflation and currency controls undermining confidence in the currency. Today, the exchange rate hovers around 100–120 pesos per US dollar.

Coins and Banknotes of the Argentine Peso

The Argentine peso has banknotes in denominations of $1000, $500, $200, $100, and $50 pesos printed in different colors. The current series introduced in 2016 features national heroes and heroines like Evita Perón.

Coins in circulation are of 5, 10, 25, and 50 centavos as well as 1, 2, 5, and 10 pesos. The 1 peso coin features the Sun of May, an iconic Argentine symbol, while other coins depict wildlife like the Andean Condor and Andean deer. The half peso coin recognizes gauchos or cowboys of the pampas.

Older series banknotes and coins are still valid but gradually being replaced by the new designs. Commemorative banknotes and coins are sometimes issued on special events like the 2019 Copa América held in Argentina. But commemorative pesos are intended for collectors, not routine transactions.

ARS Exchange Rates and Influencing Factors

The Argentine peso’s exchange rate has seen extreme volatility in recent decades mainly due to high inflation and economic crises. In 1992, the peso was pegged 1:1 to the US dollar by the convertibility law to control hyperinflation. The government maintained this convertibility by backing the entire monetary base with dollar reserves. But this overvaluation became unsustainable by the late 1990s, leading to the abandonment of the peg in 2002.

Since then, the peso’s value relative to the dollar and other currencies has declined steadily. By July 2022, the exchange rate touched 130 pesos per dollar, a depreciation of over 99% from the convertibility era peg.

The key factors influencing the peso’s exchange rates are:

  • Inflation – Persistently high inflation has dogged the peso, especially in recent years. Argentina has one of the highest inflation rates globally, with annual CPI averaging 40-50% in the past decade. Higher inflation rapidly erodes the peso’s purchasing power.
  • Government Policy – Argentina has instituted foreign exchange controls and interventionist policies in a bid to curb capital outflows and prop up the peso’s value. But currency manipulation and restrictions like banning dollar savings tend to undermine confidence.
  • Fiscal Deficits – The Argentine government perennially spends beyond its means, relying on the central bank to cover deficits by printing more pesos. The resulting monetary expansion i.e. increasing money supply leads to currency debasement.
  • Interest Rates – To tackle inflation and shore up the peso, the central bank has hiked interest rates to over 60%. But excessively high rates stifle economic growth and raise debt costs.
  • Credit Ratings – Argentina has defaulted on its sovereign debt obligations multiple times, the latest being in 2020 amidst the COVID-19 pandemic. This poor creditworthiness keeps investment flows low, weakening the peso.
  • Current Account Deficit – Argentina imports far more than it exports, resulting in a large trade and current account deficit, which requires dollar financing. But limited investment inflows necessitate repeated devaluations to stabilize the external balance.
  • Economic Growth – Recessionary conditions like the 1998-2002 depression or the impact of COVID-19 reduce productivity and weaken the peso. Meanwhile, robust GDP growth during commodity booms briefly buoyed the peso.

USD/ARS in the Forex Market

The dollar-peso exchange rate (USD/ARS) is the most traded currency pair involving the Argentine peso in global forex markets. Some key insights on trading ARS forex pairs are:

  • Liquidity – The USD/ARS has decent liquidity among emerging market currency pairs. But volumes are still lower compared to major crosses, so the bid-ask spread tends to be higher.
  • Peso Weakness – The clear long-term trend is for ARS weakness and USD strength. But short periods of peso upside periodically occur with positive news or economic recoveries.
  • Volatility – Daily trading ranges of 2-5% are not uncommon for USD/ARS, offering opportunities to profit from the swings. But the high volatility also significantly increases risk.
  • Correlation – The peso is positively correlated to other Latam currencies and commodities like oil, soybeans etc which are major Argentine exports. It moves inversely to the US dollar and global risk sentiment.
  • Intervention – The central bank frequently intervenes in the forex market to contain peso depreciation. This adds an element of unpredictability around news and data releases.
  • Technical Levels – Clear support and resistance levels are scarce on USD/ARS price charts due to the peso’s extreme fluctuations over the years. Main levels stem from previous peaks and troughs.
  • Fundamentals – Macroeconomic reports, monetary policy changes, and political developments in Argentina and the US drive trends in USD/ARS rate, rather than technical indicators.

Overall, trading the Argentine peso requires careful analysis of South American political and economic news flow alongside USD dynamics.

Impact on the Economy

The peso’s persistent weakness and instability versus the US dollar has significant implications for the Argentinian economy, including:

  • Inflationary Pressures – Currency devaluation feeds into higher import costs and domestic prices i.e. inflation. This erodes consumer purchasing power and living standards over time.
  • Balance of Trade – A weaker peso makes Argentine exports more competitive internationally. But it makes imports of capital equipment and technology more expensive, hurting productivity.
  • Capital Flight – Repeated financial crises and devaluations encourage foreign investors and local businesses to take capital out of Argentina into more stable currencies like the dollar.
  • Foreign Debt Burden – Weakness in the local currency increases the relative value of Argentina’s foreign currency denominated debt, increasing the debt servicing cost.
  • Consumption and Investment – Currency volatility and anticipated inflation cause Argentines to spend or invest less in the domestic economy, slowing growth. Savings shift toward dollars.
  • Central Bank Reserves – Attempts to artificially strengthen the official peso rate deplete reserves of hard currencies like dollars that could service foreign debt obligations.
  • Poverty – Poor and middle-class Argentines particularly suffer from the peso’s loss of purchasing power and job losses in economic crises exacerbated by currency weakness.

Outlook for the Argentine Peso

The outlook for the Argentine peso remains challenging in the near future. Change will require political will to implement difficult structural reforms and fiscal discipline. Some factors impacting ARS prospects:

  • High Inflation – Inflationary pressures are expected to persist with growth in money supply and indexed salaries offsetting the impact of higher interest rates.
  • Energy Crisis – Argentina’s dependence on imported energy sources has led to a severe shortage of dollars needed to fund energy purchases and control the currency.
  • IMF Deal – The $44 billion IMF program signed in 2022 should provide some breathing room. But continued adherence to fiscal targets remains uncertain.
  • 2023 Elections – The upcoming presidential elections add political uncertainty. A change in government could bring about tighter monetary and fiscal policies.
  • Growth Prospects – Consensus forecasts still expect the economy to grow around 2% annually. But activity remains below potential and risks skewed to the downside.
  • Exports – Global commodity prices have receded from peaks providing less dollar inflows. And export competitiveness gains from a weaker peso may be limited.

In conclusion, the Argentine peso remains under pressure and could breach the psychological 150 per dollar mark in 2023-24 absent serious reforms. But episodes of appreciation are likely during temporary periods of optimism. Carefully assessing political and economic developments will be key for trading ARS forex pairs.


The turbulence surrounding the Argentine peso over its 140-year history offers invaluable insights into the economic travails of Latin America’s third largest economy. For international forex traders, the risks posed by the peso’s volatility need to be balanced against the lucrative trading opportunities it presents.

Looking ahead, bringing inflation under control and restoring fiscal balance are critical for stabilizing the currency. Implementing structural reforms to boost competitiveness and export earnings can also help strengthen the ARS in the long run. But periodic bouts of weakness are likely in the interim given Argentina’s vulnerability to external shocks like commodity price moves. Holding some portfolio exposure to the USD/ARS cross remains worthwhile, but traders should fasten their seatbelts for the ride.