MercoPress. South Atlantic News Agency

Argentine industry demands a more “competitive” Peso

In spite of the several stimulus programs announced by Argentine president Cristina Fernandez de Kirchner, manufacturers are demanding a “more competitive” exchange rate, particularly with the Brazilian Real. Brazil is Argentina's main trading partner.

The US dollar currently stands at 3.45 Pesos, an advance from the long standing 3.05 Pesos but the Argentine Industrial Union has reiterated that with "3.4 to the US dollar we don't have the competitiveness we enjoyed when the difference with other regional currencies, particularly the Real was considerably higher". UIA argues that the difference between currencies was the source of Argentina's industrial growth in the last years. "Why did we expand five years running? because while Brazil was revaluing the Real, we had a considerable advantage", said Roberto Sacco secretary of the UIA. "But one day we had an international tsunami because of the financial crisis in the US and Europe and automatically Mexico, Brazil, Chile, Uruguay accepted a devaluation of their currencies averaging 40%, but we remained still", said Sacco. This was significantly painful for Argentine manufacturers beginning last October when to domestic inflation and the increase in costs, particularly labour, along came the 40% devaluation of the Brazilian Real. Argentina's Central Bank president Martin Redrado has insisted that the Argentine peso will not experience a dramatic fall vis-à-vis the Real. However a gradual few cents daily depreciation has been the rhythm so far. But as the US dollar creeps up Mr. Redrado also has to tackle Argentines' traditional and justified mistrust about their currency and economic policies.