Inflation is wreaking havoc, and one of the most notorious impacts is produced in the purchasing power of the highest denomination bills issued by the Central Bank, which steadily and staggeringly lose value. Something that happens today in a more exposed way with those of $1,000, compared to its predecessors.
In fact, since this paper with the image of the baker was launched in December 2017, it has lost its value significantly, since at present only has less than 20% of the purchasing power it had when it was put into circulation.
Based on the accumulated inflation, After more than 4 years have passed since the $1,000 was put on the street, his current equivalent value would be that of a ticket that represents about $5,500.
Due to this loss of purchasing power, these days the need to issue larger denomination units to the existing one, such as $2,000, $5,000 and $10,000.
Even the baker’s ticket equals about US$5.2converted to official “solidarity” dollarwhich is the one that savers can access in banks and exchange houses.
That is, a very low level when compared to their peers from other countries of the region, where their bills of maximum value are equivalent to about u$s50.
It should be remembered that when the banknote was created $1,000 at the end of 2017 meant about $55.
Until 2002, at current prices, the $100 bill was equivalent to about $13,266. A far cry from the present highest paper value.
$1,000 bills are worth less than their predecessors
When analyzing the highest denomination bill of the present, which is $1.000, the reality indicates that it reaches less and less to buy products or services. And it was much more relegated with respect to the equivalent value that the previous maximum figures of Argentine paper money had at the time of history.
That is, a unit with the image of the baker today barely enough to buy a minimum handful of products in a supermarket, wash a car or just eat a combo at a fast food place.
Not even this paper covers the value of a kilo of meatNot to mention filling a vehicle’s gasoline tank.
“The bill with the highest denomination has a poor equivalence with the maximums reached by its predecessors so far in the 21st century. Precisely, if it is taken at the value of the ticket $100 before 2002, that is, during convertibility, at current values one accessed a basket of goods and services of $13,266“ejemplifica a iProfesional Andres Mendezdirector of AMF Economy.
Of course, this highest denomination in circulation ($100) was maintained over the years, as inflation built up and climbed, and only in 2016with the change of government, began to issue higher monetary figures.
So that year came the $500 billwhich at that time was equivalent to a present value of $3,567and that dethroned the “historic” $100, which at that time allowed access to a basket of $713 at current values.
“I mean, the inflation was subtracting purchasing power to that mighty ticket $100 until almost all its value is cut off. To date, it has lost more than 99% of purchasing power that it owned at the end of convertibility,” Méndez points out.
The highest value bill in Argentina, the $1,000 bill, is barely worth more than US$5, a far cry from its regional counterparts.
The future of the $1,000 bill
In this way, it is observed that the present highest denomination bill that the country has loses more and more value, at the rate of an annual inflation that exceeds 50%. Fact that, at this level of price advance, it can continue to deepen.
“The $1,000 paper is on its way to dethrone that critical valuation who owned the $100 midway through 2016. At this rate, and if a higher denomination unit is not issued, the copy with the baker will become the higher denomination unit with less purchasing power. of the current millennium,” warns Méndez to iProfesional.
In fact, the amount of papers of $1,000 outstanding between the public and the banks is 1658.8 million unitsonly surpassed by the 2,450 million of the “historical” $100, according to official data from the Central Bank.
It clearly means that the Government, by not deciding to issue higher denominationsrequires a greater quantity of the current maximum banknotes to supply the population, given the high inflation rates.
In the next two and a half years, if inflation continues at these levels, the $1,000 bill will be worth a third of what it is now.
At what rate will the $1,000 bill depreciate?
Not only since he hit the streets until now the $1,000 bill has lost more than 80% of the purchase valuebut with these levels of price increases in the economy, close to 5% per month, it is estimated that in the coming years it will continue in free fall.
If the median of the National CPI estimates made by the Market Expectations Survey (REM) carried out by the Central Bank with different economists is considered, it can be estimated that, at current values, between the end of 2022 and the beginning of 2023 the $1,000 bill “will have displaced the meager purchasing power that the $100 had when it was ‘dethroned’ by the $500″Mendez says.
For this reason, if advances are made in the projections for the coming years, everything indicates that, at end 2024the $1,000 bill will have a purchase value equivalent to a third of the current. I mean, some $364 right now.
“If higher value bills are not issued during that period, we could affirm that if currently a paper of $1,000 buys only 6% of the goods and services which were accessed more than 20 years ago with the $100that equivalence will have been reduced to less than 3% in December 2024″, concludes Méndez to iProfesional.