MercoPress. South Atlantic News Agency

US dollar climbs to new record in Argentina: 10.90 Pesos

Fábrega's convergence strategy does not seem to be working effectively

The newly appointed Argentine Central bank chairman Juan Carlos Fábrega strategy to make the money exchange markets converge does not seem to be working: on Tuesday the 'blue' or parallel dollar soared to a new record, 10.85 and 10.90 Pesos, while the gap with the official rate again climbed to almost 60%.

 Apparently there is a strong demand from Argentines going on holidays and also speculative buying, and since the main flow of hard currency to Argentina does not come until it is time to sell summer crops, the 'price' of the greenback is expected to keep climbing. Besides there is a shortage of dollar and Euro bills.

Last May the dollar marked a record in Argentina when it reached 10.45 Pesos but on Monday and again on Tuesday the record was demolished.

Argentina is cut off from world money markets because of the pending court cases from the 2002 default, and a domestic dollar clamp since 2011 which virtually bans saving in dollars and strict controls on tourism and plastic card money when overseas, have seen the Peso crumble while the US currency steadily climbs reflecting the prevailing uncertainty.

In the last twelve months the so called 'blue' dollar jumped 47% and ended 2013 with a 53% gap with the official rate. Meanwhile as part of the convergence strategy, the Central bank continued with the gradual daily depreciation of the Argentine Peso which on Tuesday trading closed at 6.555 and 6.605 (purchase and sale) against the US dollar. This follows a 32% devaluation in 2013 and 14% in 2012.

The Central bank ended Tuesday with 20 million dollars in net sales in an attempt to appease the market.

Meanwhile the grains and oilseeds export organizations announced in an official communiqué that in the twelve months of 2013 to 27 December, it had sold in the local market 23.161bn dollars which is slightly higher than in the same period of 2012, or 23-069bn dollars.

On Monday also the price agreement reached by the government with the main supermarket chains, freezing the prices of 194 items for the whole year came into effect. There are serious doubts the agreement can support such an unstable situation.