Argentina's currency fell sharply on the parallel market this week, with the so-called 'blue dollar' selling at an all-time high of 207 pesos on Thursday, just days ahead of key legislative elections.
However, by Friday – the last business day before tomorrow’s vote – the ‘dolár blue’ had taken a breather, dropping to 202 pesos.
Meanwhile, on the official market, the greenback traded at 105.25 pesos to the dollar, within the framework of tight restrictions on the purchase of foreign currency. Controls have been in place since 2019, amid a shortage of dollars and other foreign currencies.
Reacting to the financial turbulence, the Central Bank on Friday intervened in the currency market to sell US$290 million. Over the past week, the monetary authority has had to part with close to US$635 million. The drain on net reserves continues to generate concern among trade.
In the past month, the 'dolár blue' has jumped more than 20 pesos, increasing the gap between it and the official rate to more than 100 percent. At the beginning of 2021, the 'blue’ was selling at 165 pesos.
The informal market, where the 'blue' dollar is traded, is seen as a sensitive indicator of expectations. This in turn puts pressure on inflation, the main concern of Argentines who are beginning to emerge from the recession that has dragged on since 2018 and was exacerbated by the Covid-19 pandemic. In the first 10 months of the year, prices have increased by 41.8 percent.
The soaring blue dollar is attributed by most experts to pre-electoral tensions and the belief that after the elections there will be rethinking of economic policy and exchange rate strategy.
Analysts are speculating about the possibility of a devaluation after the upcoming elections, a hypothesis repeatedly rejected by Economy Minister Martín Guzmán.
– TIMES/NA
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