“Informal” and “blue” dollar in Argentina soars to 6.60 and 6.78 Pesos
Argentina's Peso sank in informal trade on Tuesday due to intense demand for US dollars from anxious savers and holidaymakers dodging the government clamp on international currency purchases.
The so-called blue, or informal market, has become the only option for most Argentines who want to buy dollars since the government effectively banned purchases at the official rate, according to money exchange houses.
Argentine President Cristina Fernandez, battling capital flight and trying to keep dollars in the country to use for government debt payments and imports imposed controls on foreign currency purchases late last year which have since been tightened considerably.
Business groups have long objected to President Cristina Fernandez's state-centric policies. Local investors are also watching the financial difficulties in Buenos Aires province the country's largest and an engine of the national economy.
Governor Daniel Scioli, seen as potential market-friendly successor to the president, is under intense pressure from trade unions and from the administration of Cristina Fernandez who are now intent in clipping his wings and ambitions.
The clash has gone as far as the federal government denying sufficient funds to pay for salaries and investments, even when the province is a powerhouse in agriculture and manufacturing and the main contributor to the highly centralized tax revenue system.
Scioli was publicly reprimanded by the president and some of her ministers saying the governor should learn to better manage scarce funds, and a judge ordered him to pay June salaries and the July bonus fully and not in instalments as he had offered.
The increasingly tight controls on buying dollars are also forcing holidaymakers to pay a premium in the black market as the AFIP tax agency as demand far exceeds the amount allowed to be bought at the official rate.
”The $100 dollars (per day) that the government lets you buy for holidays isn't enough to go abroad with a family,“ another currency trader said.
Persistent demand for dollars, coupled with the stricter controls, is causing a widening of the spread between the formal and informal markets.
The spread reached 45% on Tuesday as the informal dollar jumped to 6.60 pesos, according to the ask price. In regulated inter-bank trade, the currency slipped 0.11% to end at 4.5525 pesos per dollar.
In the blue-chip swap market, which sets the implied exchange rate used to buy Argentine assets traded abroad, the peso traded at 6.78 per dollar, traders said. That marks a 49% spread above the formal price.
The currency controls are fanning a rally by dollar-denominated Argentine bonds as Argentines rush to dollarize their portfolios, Credit Suisse said in a research note.
”We expect the ongoing dollarization of portfolios by local investors to continue as restrictions on access to foreign exchange seem likely to be permanent rather than temporary,” it said.
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This article only goes to show that CFK is hopeless out of touch with the people of Argentine, the peso is failing and they look to insulate themselves like most sensible people would do. The peso is now on the verge of failure and she is burying her head int he sand. it is akin to nero fiddling whilst Rome burned. What Argentina needs is a government which udnertsands economics and long term stability but a Peronist farce intrested in cementing its power base by short term populrist decisons like the natiolinsing of YPF. The doller clamp will only fuel resentment by the middle classes who are anti CFK and the majoroty tax payers. We are alreayd seieng civil unrest in the provicnes which is sure to now spread and I hope depose this corrupt, self gratifiying shame of a government which only believes in the restriction of peoples rights and freedoms.
My formula for next presidential election Kicillof president, Castro Vice and
keep to Timerman foreign office and Moreno INDEC.
I would like to include Hugo Chavez also but unfortunately will take some time to make his ARG. DNI.
And what about Fidel Castro to Argentina's UK embassy?
Anyone think it will be 7/1 today? I am WEEKS ahead of my guess!!
www.hrw.org/sites/default/files/reports/venezuela0712webwcover.pdf
so much for Argentina being a leader in human rights!
Integrity has nothing to do with Argentine politics. Words are very cheap. Its all about going from one sensational event to the other to stay in position and so whatever happened last week is irrelevant.
I doubt CFK et al are rattled but they know they have work to do to maintain the illusion. This is the hard part of the cycle. Its expected in Argentina that the economy crashes every 5 - 10 years. In fact I believe that the government deliberately obstructs and sabotages the economy when it gets to big because if the people and industry have too much money and thus freedom they have too much power and influence and become a threat to the peronist system.
Spot on Tobers, peronism would be cutting its own throat if it gave power to the people. Its only raison d'être is to accmulate power.
7 EnginnerAbroad (#)
The HRW report is one of the most horrifying pieces of information that I've read since Kosovo!!!!!
Its a marked difference between Argentine politics and British politics for example.
A British government would give anything for an ever growing economy. It does not fear it it, it cherishes it. Great! More tax money for government budget - health service, schools, military etc! ...and certain reelection.
In Argentina as the economy grows the government- progressively adds more and more restrictions and tariffs to retard and keep it under its control.
Which explains why Argentina fails utterly to take advantage of its tremendous potential to increase general wealth and reduce poverty etc.
Almost without trying Argentina would be a richer, more stable and egalitarian society!
Such a waste and a shame.
Once again spot on.
It really makes my blood boil to think that in 1904 it was a toss up between us and the USA which was the richest country, now look at us!!!
It is all thanks to bloody Juan Domingo and his successors.
I think potentially Argentina is still one of the richest countries in the world, but with peronism we will never be able to realize that potential.
Know I know you are taking the piss!
Looks like my 9/1 and raging uncontrollable inflation by the end of the year was too gentle. Could well be the end of October!
The only people I feel sorry for are the likes of Simon68 and EnginnerAbroad who, unlike you, know how fcuked up the country has become under the despotic Kirchners.
I think the Arg peso is the fastest depreciating currency in the world this month.
This is going to spike inflation astronomically! I wonder if inflation will break 50% mom by the end of the year?
Is Argentina looking at hyperinflation before long, do you think?
Really?
But reality in UK shows the contrary.... lets see...
Recession, Poverty, Huge Unemployment, business closing very day, health service cuts, education cuts, Military cuts, debt burden, riots, stagnation, and any sign of re-election I guess.
Ask friend Gordon for more details. Ha ha
Many here seem to work for an evangelist religious group those guys that want to convince you for any mean that god is your salvation and that the world is going to end soon. Ha ha
@Simon68
“It is all thanks to bloody Juan Domingo and his successors”
I ‘m not peronist but every time I hear some of you “Radicals” I’m serious thinking to get involve into the party just for fun.
I don’t remember who was the American politician than when visiting Argentina during a crisis he said.
“This is like would be USA if the south (Landlords and pro agri neocons) would won the war”
Simon you live in the past and that will never come back again. I suggest you to move to UK there you will be happy and will be able to vote for CaMoron and enjoy all the fabulous things that you like to have. Ha ha
I give you 3/6 months until we see you back in Argentina.
You do need some money to pay the ticket?
@ChrisR
Save your sorry for yourself because I put my money where my mouth is, instead of doing like you do that talk and talk about wonderful UK and then you have to move to Uruguay to have a decent life.
Why don’t to go back to UK? Any logic explanation?
“I think potentially Argentina is still one of the richest countries in the world”
Spot on - among the 10 richest per capita, perhaps even among top 5 - potentially, that is.
About a century of mismanagement has kept Argentina where it is today.
El pronóstico: Mismanagement 7x24 en el siglo XXI
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