Parallel dollar soars and reaches almost 500 pesos in Argentina, and government accuses opposition and speculators – 04/25/2023 – Market

The price of the dollar in Argentina’s parallel market has risen in recent days and reached 497 Argentine pesos this Tuesday (25), 35 pesos more than on Monday (24), reflecting high inflation, according to economists. For the government, the rise is the result of “rumors and false news”.

In addition to the parallel, or “blue” dollar, being traded in small quantities, its price is taken as a sign of the mood of the markets, in a country with few exchange reserves and very restricted or almost non-existent access to the official dollar market, which is sold at 227.54 pesos this Tuesday, amid strict exchange controls.

“For several days we have been experiencing an atypical situation of rumours, versions, false news and their consequent impact on financial instruments pegged to the dollar. We are going to use all the tools of the State to order this situation”, tweeted the Minister of Economy, Sergio Massa.

The minister stated that the government will use the courts to investigate and clarify market conduct and the Financial Information Unit and the National Securities Commission of the country to analyze operations related to money laundering.

After Massa’s speech, the parallel dollar stopped rising and dropped slightly from its high of the day.

Economist María Castiglioni explained to the TN news channel that, in a context where inflation, far from converging with the official target, is accelerating even more, Argentines seek refuge in the dollar to preserve their purchasing power.

The country registers inflation of 104% in 12 months, which erodes the income of Argentines.

Less than two weeks ago, on Friday (14), the “blue” dollar was sold at 392 pesos, while this Tuesday it reached close to 500 pesos per banknote at the end of the day, with a difference of 120% compared to the official .

Six months before the presidential elections, Argentina is experiencing uncertainty, with an open political scenario between the center-left governing coalition and the right-wing opposition, after President Alberto Fernández announced last Friday (21) that he will not will run for re-election.

financial strain

In an interview with journalists with Romanian President Klaus Iohannis at the Casa Rosada, the Argentine president blamed the right for operating in the markets to maintain extraordinary profits.

“It’s a permanent practice of the Argentine right: first they install rumors in the morning, they operate throughout the day and when the afternoon ends, they withdraw their profitability from the exchange market and thus damage the savings of Argentines,” said Fernández.

The government has resorted to strong monetary issuance to support public finances, in a context of very limited access to international credit. Argentina also maintains a US$44 billion credit program with the IMF (International Monetary Fund) that obliges it to meet fiscal deficit targets.

Seeking to strengthen reserves, the Executive has promoted mechanisms such as the so-called “soybean dollar” to encourage the agricultural sector to sell production at a more favorable exchange rate than the official one, with the aim of improving revenue. But a severe drought and the advance of the ‘blue’ limited the scope of this initiative.

As part of the currency race, Fernández met on Monday with the president of the country’s central bank, Miguel Angel Pesce, without any information on what was discussed. The president said he was working with Massa and assured that Pesce’s presidency in the monetary authority “was never in discussion”.