Should We Cry for Argentina Case Study Example | Topics and Well Written Essays - 250 words

Should We Cry for Argentina - Case Study Example The peso had initially been pegged to the dollar to increase the popularity of the domestic currency following a hyperinflation that had led to demand of payments in dollars back in the 1990s. Local companies blamed their defaults on new requirements that all money sent abroad had to have the central bank’s authorization, a process that proved to be too slow. Increased taxes on exporters and cash-rich firms, and inability to obtain money to pay foreign suppliers intensified the local companies’ struggles. International companies faced rising debts and losses from their Argentine operations as the peso continued its decline. Aerolineas Argentinas, an Argentine airline company, was forced to cancel all of its international flights due to the economical crisis that saw it barely escape bankruptcy in 2002. The rising inflation resulted in a significant increase in commodity prices thus making lives of ordinary difficult. People opted to spend on much cheaper goods than before. It is however reported that the inflation prompted the Argentines to spend rather than save and see their money depreciate in value (Agren). Rates of unemployment soared and poverty ensued too and by the 2012 purchasing power was at an all time