MercoPress. South Atlantic News Agency

Dollar in Argentina breaks 10 Pesos barrier, despite Cristina Fernandez and her “I want to leave” minister

“Nobody cares about the US dollar in Argentina”, said Minister Lorenzino

The ‘blue’ or parallel dollar in Argentina beat a new record on Tuesday by breaking the 10 Pesos milestone and ending trading at 10.08 Pesos. The official rate meantime remained relatively stable and closed at 5.16 and 5.21 Pesos (buying and selling price).

The Tuesday record (up form 9.82 Pesos on Monday) and the 92% gap between the two markets came a few hours after President Cristina Fernandez warned ‘speculators’ that her government will not devalue the Argentine currency, ‘point blank’ and following on Economy Minister Hernan Lorenzino’s statement that “nobody cares about the US dollar”.

With the new advance 1.8% of the dollar on Tuesday, the greenback has ballooned 46.5% in Argentina since the beginning of the year. Foreign exchange traders reiterated that there is a ‘huge misbalance’ since Argentines wants to get rid of their Pesos and dollar holders reluctant to sell, only when on need.

Minister Lorenzino who became famous world wide when he said “I want to leave” when asked by the Greek television about Argentine inflation, repeated his attitude over the week-end when he was questioned about the price of the US dollar.

“Sure, the price of the ‘blue’ dollar is going to continue climbing, but nobody cares about the US dollar in Argentina”, was the reply.

However amid fears over the increasing rate of the “blue” dollar, economist Aldo Ferrer warned that an “out-of-context devaluation” will only “make the problem worse.”

In statements to a Buenos Aires radio station, Ferrer considered controversy over black market prices should not be reduced to the “discussion” over the devaluation of Argentina’s Peso currency; such debates “mask” plans by certain leaders that seek to “return to neo-liberal polices,” he insisted.

For the ex Argentine ambassador to France, foreign exchange is only “one variable of the economic policy” and pointed out the need to “consolidate achievements reached in several key areas“ such as debt restructuring and economic sovereignty decisions.

Only countries that exercise their sovereignty go well, Ferrer stated and added that Argentina’s situation is “reasonably solid.”

However former Central Bank head Aldo Pignanelli urged the government to crack down on inflation and ”blue” dollar skyrocketing trends and demanded an adjustment plan as he forecasted a troubled economic scenario.

“A comprehensive program must be done to settle the dollar problem. The government must seek a macroeconomic plan of stabilization and control of inflation. Then it should think about an adjustment,” the former official said to a local radio station.

For Pignanelli, the “blue dollar” that trades in the black market “reflects the unbalance of Argentina’s economy, with a fiscal deficit that grows, with a ‘delayed’ foreign exchange rate, with no productive investments and with people wanting to take dollar reserves because the Peso is not reliable.”

Accusing the administration of President Cristina Fernández of “dismissing reality” Pignanelli warned the government lost the 2009 legislative elections amid a “troubled economic context.” “The same is likely to happen now,” he considered as October’s electoral battle approaches and government’s control of both houses of Congress is set at stake.

Buenos Aires city real estate operator Eduardo Constantini said there is an urgent need to have monetary and fiscal discipline and interest rates in line with the increase in costs.

“You have to look at the plain Economics textbook”, said Constantini who called for ‘integral and gradual actions, which will put Argentina on course to growth again. Devaluation of the currency is not an option”.

Constantini added that Argentina has “a very low foreign debt, huge volumes of grains and oilseeds to export at good prices, the only thing we need is good management of government expenses, of money emission and interest rates”.