The Material Value of the Coin is Higher than its Face Value in Argentina
Argentina has been struggling with economic difficulties and inflation in recent years. The country’s currency, the peso, has lost significant value against the dollar, adversely affecting the economy and people’s purchasing power. In countries with high inflation rates, the value of coins usually decreases because their nominal value is lower than their material value. However, the opposite happened in Argentina. The material value of coins became higher than their nominal value.
In April 2023, Argentina’s inflation rate reached 108.8%, making it one of the world’s highest inflation rates. The reasons for such a high inflation rate include the government printing money, fluctuations in exchange rates, increases in energy and food prices, tax and spending policies, among others. All of these factors have led to an interesting outcome.
The prices of copper and zinc, which are used in the production of coins in Argentina, have increased in recent years. This has led to coins having more metal value than their nominal value. For example, a coin worth 1 peso has a metal value of about 1.5 pesos. Therefore, some people prefer to melt coins and sell them as scrap metal, which harms both the government and citizens.
Argentina’s inflation problem is an urgent issue that needs to be resolved. The government needs to tighten its monetary policy, reduce the budget deficit, complete debt restructuring, and implement structural reforms to stabilize the country’s economy. Otherwise, Argentina’s economic future could become irreparable.
The incident in Argentina raises the question of whether Turkey could experience a similar situation. Turkey is also a country struggling with economic difficulties and inflation, with the value of the Turkish lira being low against the dollar. However, the material value of coins in Turkey is not higher than their nominal value, so a situation like the one in Argentina is not currently a concern.
Finally, it is important to note that such actions, melting or breaking Turkish lira coins, are illegal and can result in penalties.