MercoPress. South Atlantic News Agency

US dollar soars in Argentina and is just a few cents away of 9 Pesos in the parallel market

Farmers have started to sell their crops but prefer to keep funds in US dollars

The US dollar in Argentina’s ‘blue’ or parallel market skyrocketed on Wednesday to 8.91 and 8.94 Pesos, beating the previous record of 8.75 Pesos from March 20, previous to Holy Week. The official rate meantime remained relatively stable and closed trading at 5.13 and 5.18 Pesos, which means the gap between the two markets stands at 71%.

The gap was 10% at the beginning of 2012 but then climbed and hovered at 30% to 40% during the second half of the year, and consolidated at over 60% since March 2013.

A third market involving the sale of Argentine assets such as shares and bonds overseas, remains at 8.90 Pesos to the dollar.

According to market analysts the increase can be attributed to the fact Argentine farmers are selling their crops for which they are paid with official market dollars, but nevertheless want to have greenbacks and appeal to the parallel market. Furthermore some Central bank ‘friendly’ operators that were helping to contain the soar during March seem to have ‘disappeared’.

The same analysts said that according to official data last week the influx of dollars in the official market increased 14% as grains and the cooking oil industry retook exports totalling 816 million dollars, its highest level since June 2011.

During the first quarter of this year Argentine overseas sales of grains, oil seeds and sub-products from the cooking oil industry reached almost 4 billion dollars, which is 15% below for similar operations a year ago.

Analysts also anticipate that demand for the US dollar will remain strong despite the crops’ sales season when the official dollar market is abundantly supplied, but as has been happening Argentines prefer to keep their money and liquidity in foreign currency which will maintain pressure on the ‘blue’ market.

“Nine Pesos for the dollar is just round the corner” forecasted a forex operator in Buenos Aires.