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The Argentine Peso is the official currency of the Argentine Republic, which is the largest (by area) Spanish-speaking country in the world. The peso, which is divided into 100 centavos, is designated simply with an ordinary dollar sign.
The foreign exchange market symbol for the Argentine peso is ARS. There have been several versions of the peso over the years. The current version, known as the peso convertible, which debuted in 1992, initially enjoyed a USD/ARS exchange rate of 1:1. It is due to an agreement that Argentina’s central bank – the Central Bank of the Argentine Republic – was able to negotiate with the United States.
However, since that agreement expired in 2001, the relative value of the peso has steadily and substantially declined. As of late 2020, the official exchange rate with the US dollar is 83 pesos = 1 USD. However, the practical reality is that the underground, black market exchange rate is more than twice that high – standing at nearly 200 pesos for one US dollar.
The Argentine peso is the official currency of the Argentine Republic.
Argentina has been troubled by high inflation rates for several decades.
The practical problems that Argentina’s money troubles have inflicted on its citizens has motivated an increasing number of them to convert their money into cryptocurrencies, such as Bitcoin.
Argentina’s Troubled Economic History
In September 2020, the Argentine peso’s foreign exchange value fell by an additional 10% right after Argentina’s central bank announced its intention to further restrict the movement of the peso. The central bank’s attempts to prop up the Argentine peso over the past couple of decades are largely a record of one failure after another.
It’s difficult for anyone to recall that a little over a century ago, in 1895, Argentina was ranked as the seventh wealthiest nation in the world and boasted the absolute highest gross domestic product (GDP) per capita. Following the Great Depression in the 1930s, Argentina began a seemingly unstoppable slide into economic decline and political unrest, with the governing authorities often accused of corruption that only enhanced the country’s economic woes.
Since the mid-1990s, Argentina has experienced severe economic recessions, soaring unemployment, and hyperinflation that has occurred despite the central bank’s attempt to control the value of the peso. Massive capital flight from the country in the early 2000s eventually led to the Argentine government freezing bank accounts so that no more money could be transferred out of the country. The government is, in late 2020, attempting a massive and complex restructuring of $65 billion in debt that it has defaulted on.
Although Argentina is blessed with abundant natural resources, a highly literate and skilled labor pool, and a diversified economic base, its economy has been plagued with one rollercoaster ride after another of spiraling inflation, increasing income inequality, and worsening poverty. In 2017, the annual inflation rate in Argentina was pegged at 24%. By 2020, it was up to nearly 40%.
Interestingly, Argentinians, desperately in search of a way to hold onto value, have shown increasing interest in the use of cryptocurrencies, such as Bitcoin. Argentina’s financial woes are, thus, driving financial innovation.
Successive Argentine Pesos
Argentina has gone through a succession of currencies that have all been labeled “pesos.” In fact, now and again, there was more than one “official” peso in circulation in the country. Even the famous Spanish pieces of eight were at one time, in Argentina, referred to as pesos.
Upon attaining independence in 1816 from its position as a part of the Viceroyalty of Peru, a Spanish provincial district, Argentina’s first official currency included Spanish reales, Portuguese escudos, and Argentina’s own soles. In addition, the currency of neighboring countries was also generally accepted in Argentina.
In 1826, Argentina issued two paper currencies, both designated as pesos – the peso fuerte and the peso moneda corriente. The peso fuerte was initially pegged at a value of 17 pesos = one Spanish ounce (27 grams) of gold. The value of the peso moneda corriente was intended to be identical with that of the peso fuerte, but its relative value fell in subsequent years. Both currencies were replaced in 1881 with a single currency, the peso moneda nacional. The initial exchange rate was as follows:
1 peso moneda nacional = 8 reales
1 peso moneda nacional = 1 peso fuerte
1 peso moneda nacional = 25 pesos moneda corriente
The peso moneda nacional was succeeded in 1970 by the peso ley, which was replaced with the peso argentino in 1983, which was in turn replaced by the austral in 1985. The austral was replaced by the current peso, the peso convertible, in 1992, at an exchange rate that reflected Argentina’s ongoing inflation problem: one peso convertible = 10,000 australes.
Argentina’s Current Coins and Banknotes
The 1992 currency changeover to the peso convertible was accompanied by new coins minted in denominations of 1, 5, 10, 25, and 50 centavos. A victim of inflation, the 1 centavos coin ceased to be minted after 2001. Later on, in 2017, the Argentine central bank also began issuing coins in denominations of 1, 2, 5, and 10 pesos.
The central bank has also issued a number of commemorative coins since 1994, ranging in denominations from 50 centavos to 5 pesos and commemorating a wide variety of notable historic figures and events. For example, the 1996 commemorative 50 centavos and 1 peso coins mark the 50th anniversary of the founding of UNICEF – a United Nations organization that has next to no direct connection with Argentina. The 1997 50 centavos and 1 peso commemoratives honor the life of Eva Peron.
The latest series of Argentine banknotes, the 2002 series, were issued in denominations of 1 peso, 2 pesos, 5 pesos, 10 pesos, 20 pesos, 50 pesos, and 100 pesos. In 2016, the central bank added the 200 peso, 500 peso, and 1,000 peso notes.
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