Argentina's famous ‘dólar blue’ parallel exchange rate broke through the psychological barrier of 600 pesos per greenback on Wednesday.
The threshold was breached just four days before crucial primary elections take place to determine the candidates for the presidential ballot in October.
Reaching such heights means that the peso has depreciated by 17.5 percent on parallel markets over the past month. On July 10, buying a ‘blue’ dollar cost 495 pesos.
Argentina’s government has strict currency controls in place and utilises more than two dozen exchange rates to manage access to foreign currency. Buying a dollar at the official rate cost 197.82 pesos on Wednesday afternoon.
Although the sums traded on the 'blue dollar' market are small, its exchange rate reflects market expectations in Argentina, which is wracked by very high inflation. Prices have risen 115 percent over the past 12 months.
Speaking at a campaign rally on Tuesday, Economy Minister Sergio Massa – the ruling coalition’s leading candidate in the presidential race – warned that he would punish speculators who are taking advantage of financial turbulence.
Moreover, international reserves have been falling day by day for months. On Tuesday they stood at US$24.126 billion dollars, according to the Central Bank. Economic analysts estimate that the holdings available for use are practically zero.
In recent weeks Argentina has used yuan from a currency swap with China and loans from Qatar and the Andean Development Corporation (CAF), as well as its own Special Drawing Rights (SDRs), to pay maturities on its US$44-billion debt deal with the International Monetary Fund.
– TIMES/AFP
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