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Argentine government insists a ‘blue dollar’ at 6.50 Pesos is the target

Saturday, May 11th 2013 - 05:47 UTC
Full article 15 comments
The influential Moreno has been doing the round of ‘friendly’ money exchange houses The influential Moreno has been doing the round of ‘friendly’ money exchange houses

Argentina’s Secretary of Domestic Commerce Guillermo Moreno wants to bring the foreign exchange black market ‘back in line’ using new dollar securities the government plans to issue locally as part of a major tax amnesty plan, according to Alfredo Piano, Chairman of Banco Piano SA.

The administration of President Cristina Fernandez this week asked holders of undeclared dollars and assets, at home and abroad, to surface the funds free of taxes in exchange for a 2016 bond that yields 4%, certificate of deposits to invest in real estate and promissory notes.

Moreno, who is responsible for setting price caps and import controls, wants the supply of dollars from the promissory notes to bring the rate in the illegal market down to 6.5 Pesos per dollar from the current 10 plus Pesos per dollar, Piano revealed to a local radio following a meeting with the minister.

Argentines will be able to buy the promissory notes with Pesos and cash them in at banks, Piano said, without providing additional details.

“He’s convinced this will make the dollar rate drop to 6.5 Pesos; I think that’s a bit exaggerated” Piano said, citing the meeting with Moreno. Nevertheless he admitted “This measure will undoubtedly cool the market”.

Moreno who has worked both for former president Nestor Kirchner and the current administration is considered one of the heavy weights of the cabinet. A very influential character, although quite ignorant, he has no qualms about using thug methods, threats, coarse language, punching or even receiving business people at his office with a gun on the desk, when wanting to impose his points of view.

These methods were very common when the inflation campaign to bring down food and other basic prices at supermarkets and stores.

The greenback in the parallel market, or ‘blue dollar’ has soared 35% this year with a gap ranging from 80% to 100% compared to the official rate of 5.2175 Pesos. Access to dollars at the official rate is restricted to Argentines because they are banned from buying foreign exchange for savings.

“We have to be optimistic, or else we are screwed,” Piano said, in reference to government measures and tax amnesty to boost the supply of dollars. “There are people willing to pay anything for a dollar, which is why it’s at 10 Pesos”.

Cristina Fernandez has tightened restrictions in the currency market since her October 2011 re-election to curb capital flight and to preserve reserves used to pay foreign debt and imports. Central bank reserves have fallen 9% this year to 39.3 billion, the lowest level since May 2007.
 

Categories: Economy, Politics, Argentina.

Top Comments

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  • reality check

    Prommisory notes. That the name of the new currency then?

    May 11th, 2013 - 06:22 am 0
  • Chicureo

    If wishes were horses, beggars would ride... As they used to say...

    May 11th, 2013 - 06:35 am 0
  • Xect

    Buying Argentine debt is akin to simply setting the cash on fire only it takes slightly longer to burn.....

    May 11th, 2013 - 07:10 am 0
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