MercoPress. South Atlantic News Agency

Argentine corporations expect US dollar to reach 4.30/4.50 pesos in 12 months

Domestic issues have displaced the global crisis as the main source of concern for the Argentine economy.

A majority of Argentine entrepreneurs believes the local currency will suffer a significant depreciation against the US dollar in the next twelve months according to a poll among 137 leading corporations.

The Argentine peso currently stands at 3.83 to the US dollar but by June 2010, 32% of interviews said the exchange rate will be in the range of 4.10 to 4.30 while another 31% estimate the value will be anywhere between 4.30 and 4.50 pesos to the US dollar. In other words two thirds of entrepreneurs anticipate a US dollar ranging from 4.10 to 4.50 in a year’s time. This means devaluation with an axis of 15%.

This marks a significant jump from last February when expectations for the majority of interviews was in the range of 4.01 pesos to the US dollar.

Equally interesting were the answers referred to the destabilization factors threatening the Argentine economy according to the poll, even when it was done before the recent midterm election which debilitated the Cristina Fernandez de Kirchner administration.

Political confrontation concentrated most concerns, 36.6%, followed by the increase in government expenditure, 22.4% and 13.4% salary and work conditions disputes.

This means that domestic issues, political confrontation and fiscal management concentrate most attention of Argentine businessmen. This marks a difference from previous polls (February) when inflation, the international crisis and the fall in commodities prices were the priorities.

Looking into the future, a majority 47% expects the local economy to recover in the second half of 2010, although 38.5% admitted that good signs will be evident in the first half; virtually nobody (2.2%) expects recovery this year.

Whether an improved global economy can help Argentina recover sometime in 2010, only 14.2% adhered to the hypothesis. A majority, 53.7%, considered such a possibility moderate; 27.6%, low and 4.5% almost nil.

The poll was done among top managers of Argentina’s main corporations, with sales above 10 million US dollars in the last fiscal year. The 137 corporations involved have an annual turnover equivalent to 27 billion US dollars and employ 168.000 people. Interviews took place between May 20 and June 26.

Meantime it was revealed according to Central Bank statistics that 2.6 billion US dollars left Argentina during the month of June in coincidence with mid term elections. This was the highest since last October, 4.6 billion, when the Argentine government took over the privately managed pensions funds estimated in 15.5 billion US dollars.