Interest rates hit by 40% due to depression in Argentina’s currency
On Friday, according to sources, the prevailing steel industry contracts as well as upcoming sales are both affected due to 40% general interest rate set by government and extraordinary depression in Argentina’s currency in 2018. Since the commencement of May, the deflation of peso in contradiction with US dollar intensely stressed prices of steel. The devaluation of peso against dollar in May was more than 12% which increased up to 26%. On May 31, $1=24.98 peso. The Argentinian President Mauricio Macri played a wrong move by increasing general interest rates to 40% from 32.25%, which disheartens the investors who wagered on US currency and flew the peso at high speed. The steel contracts of Argentina have great influence, the issue turned out for those distributors and traders who have to pass on price differentials to end users to currency defamation, and due to considerable growth in prices, customers hold back their buying. Another issue is to pay in terms of Argentina, since a lot of distributors pay mills in one month and take delivery of payment in three or more monthly installments from end users.
According to a distributor, it is difficult for them to accept the cost differences as was not mentioned in previous contract as well as announcement of new interests in May, due to which the movement lessened as no one wants to bear loss. The anticipation is for prices to grow in forth coming months, trying to succeed in international signals determined by Mexico, US and Brazil.