Buenos Aires Times

economy EXCHANGE MARKETS

Dollar surges beyond 42 pesos

After a relatively subdued Ash Wednesday, following the Carnival long weekend, the dollar surged yesterday beyond 42 pesos, setting new records for the first time in six months.

Thursday 7 March, 2019
An exchange house in Buenos Aires.
An exchange house in Buenos Aires. Foto:NA/DANIEL VIDES

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After a relatively subdued Ash Wednesday, following the Carnival long weekend, the dollar surged yesterday beyond 42 pesos, setting new records for the first time in six months. The Central Bank scrambled to sell futures in a bid to control this revival of currency volatility, as well as auctioning more Leliq bonds to absorb liquidity.

Experts were divided as to whether the causes of this advance were local or international – whether it responded to a renewed “flight to quality” (towards China as well as the United States) on the part of emerging markets worldwide with Argentina one of the most vulnerable of these or whether it reflected such local factors as persistent inflation and the continuous uncertainties of this electoral year (with Neuquén province housing Vaca Muerta shale voting tomorrow).

Some analysts also believe that recent interest rate reductions to tame recession have backfired.

The dollar actually dipped yesterday morning from its Wednesday close of 41.71 pesos but the calm did not last. By the early afternoon the Banco Nación was quoting 42.60 pesos per greenback, fully a peso up on the previous day.

In just over two months 2019 inflation forecasts have risen from an average of 28 percent at the start of the year to 31.9 percent. Country risk also moved up to 753 points yesterday.  

- TIMES
 

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