“The economic situation in our country is so serious that it has reached the point where coins with a face value of less than $5 are sold informally for values up to three times higher per its weight and value in copper than because of its nominality,” Blanco maintains.
Coins are worth more for their metal than for denomination
The military conflict caused high volatility in the value of raw materials such as nickela metal present in Argentine coins of old mintage (the new family of coins that was launched in 2018 is made mostly of steel).
Nickel soared in value after the start of the war, that the London Metal Exchange momentarily suspended its listing after it reached its highest historical price on March 7, when it marked US$42,995 ton. It then dropped to touch $28,000.
Copper is also present in Argentine coins. It had a peak in its value on March 7, but then stabilized. Today it is worth about US$9,000 per ton but at the beginning of the year, when it was around US$9,700.
“The material of the circulating money in a country ends up being worth more than the nominal value of that circulating in economies that go through a prolonged period of high inflation, as in the case of Argentina. Especially in the case of coins, the value of the metal increases according to their international price while the nominal value of these currencies does not change”, explained Juan Ruiz, from BBVA Research.
What does the bill say
“Given the insufficiency of the measures taken by the Central Bank, which until now has limited itself to not minting new coins and not returning to circulation those that come into its possession, We request the withdrawal from circulation of all legal tender coins whose nominal value is less than five pesosuntil inflation is less than 10%,” said the senator.
And the changes? “Today the merchants round up. And for me it should be down. Suppose you go to the grocery store and you get 683 pesos, they should charge you 680 pesos,” the senator suggested.
Source: Ambito
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