The country is preparing for the issuance due to high inflation and the coronavirus. A second import from Brazil for 1,000-peso banknotes might be ready.
The Argentine government opened an international tender to print 250 million 500-peso banknotes and face a possible shortage of cash. High inflation and the health crisis that triggered the coronavirus pandemic are putting pressure on the local monetary outlook, so the Mint opened an international tender.
The agency launched the “express” selection process for printing and completing 500-peso banknotes in recent weeks, but the delivery deadlines will begin on August 26th. That day, Argentina must receive the first 100 million banknotes with a second delivery on September 25th, also for 100 million banknotes. The total order would be complete on October 15th with the other 50 million pending.
The trouble of the Central Bank of the Argentine Republic (BCRA) is probably the main obstacle since it occurs amid a major monetary issuance in dozens of countries. In other words, the economies are injecting more funds as a measure to face stagnation.
To accelerate the process, which usually takes at least six months, the Mint will send paper and ink so that the chosen supplier has the raw material. Estimates indicate that the Argentine government could award the tender in a week. Some interesting firms reportedly requested an extension of the deadline, but they did not receive it.
Local media assure that an import of 1,000-peso banknotes from Brazil is almost closed, which would complete a guideline of the Mint to maximize its production of banknotes of this denomination. Both the 500- and 1,000-peso banknotes are the largest denomination specimens in the country.
The fact that several Mint employees tested positive for coronavirus recently compromised plans to satisfy Argentina’s “thirst” for cash. The contagion among the workers led to a temporary stoppage of activities at their two headquarters in Retiro and Don Torcuato.
To meet the growing demand for banknotes, the agency is working 24 hours in shifts of 8 hours each, which shows the urgency of the country to mitigate the effects of inflation and support its fellow citizens. The international tender suggests that all the efforts have been insufficient to avoid a major collapse, making it necessary to resort to external actors.
The case of Argentina is similar to what happened in the USA but on a greater scale. The government of Donald Trump and the Federal Reserve have announced the issuance of billions of US dollars to try to rescue the economy from a recession due to the COVID-19 pandemic and the semi-paralysis of its productive system.
Alberto Cárdenas, a market analyst and trader, indicated that the general printing of money is unprecedented. However, he said that fiat currencies could show a loss in value in a recovery scenario. For this reason, many Argentines seek refuge in cryptocurrencies like Bitcoin.
In June of this year, the BCRA had already issued more than ARS 1 trillion to finance the public sector, an all-time nominal record. Argentina is showing an annual inflation rate higher than 50%, and so its effects on the economy would not be the best.
By Alexander Salazar