Argentina’s ‘blue dollar’ yields on expectations but still above 10 Pesos

Saturday, May 11th 2013 - 05:49 UTC

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“The current economic moment saying is much worse than in 2001”, says Cavallo

The so called ‘blue dollar’ traded in Argentina’s parallel market ended on Friday just above 10 Pesos after having reached record highs earlier in the week (10.55 Pesos) and following the Thursday announcement of a tax amnesty bill and other ‘whitewashing’ financial instruments.

High volatility and uncertainty turned most traders off due to increasing fears of Cristina Fernandez government controls over the “blue” dollar informal market.

The official dollar rate ended half a cent higher compared to Thursday’s close at 5.18 Pesos (buying price) and 5.235 Pesos (selling price), totalling a three-cents rise in the week.

Nevertheless the gap between the two markets which reached 100% earlier in the week, on Friday stabilized at 91%.

The Argentine government believes that with the influx of dollars under the umbrella of the tax amnesty, the ‘blue dollar’ can be pushed back to 6.50 Pesos as was originally planned by the economic authorities.

However former Economy Minister Domingo Cavallo renewed criticism of the country’s current economic moment saying “it's much worse than in 2001,” when an economic downturn and a controversial freeze of all bank accounts known as “corralito” led to a social and financial chaos.

“Back in 2001, there was an international situation which was unfavourable to Argentina, but at least we had sources of financing. Industrial or agriculture business owners gained from low prices due to international circumstances and the devaluation of foreign currencies, but at the same time, they paid low costs,” Cavallo recalled.

In statements to a local radio, he stressed “the government is tangled up, and it's impossible to find a way out socially harmless without credibility.”

Categories: Economy, Politics, Argentina.

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Anglotino
It's like an economic Groundhog Day...... but worse this time around.
May 11th, 2013 - 07:52 am 0
manchesterlad
As long as there are currency controls & inflation is over 25%, the blue rate will remain high. The whitewashing of dollars will not guarantee a supply to the public who still want to protect their savings in dollars & not overvalued pesos

Also the general feeling in Buenos Aires is that this 'amnesty' to return dollars to Arg is just a way for all the corrupt politicians to bring back the bags of laundered money before they get exposed by new international banking regulations
May 11th, 2013 - 12:07 pm 0
Chicureo
Google ANY historical article about the Argentine monetary history and you'll clearly understand that NO ONE sane trusts keeping their savings in Argentine controlled financial instruments (Pesos, Bonds, promissory notes, etc...) including members of the CFK government.)
The ones that really suffer when the economy collapses are the middle class and especially the poor.
May 11th, 2013 - 02:52 pm 0

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