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US dollar approaching the 12 Pesos mark in Argentina

Saturday, January 18th 2014 - 06:39 UTC
Full article 141 comments
No end in sight for the current run of the greenback No end in sight for the current run of the greenback

The US dollar in Argentina reached a new record on Friday at the end of nerve racking week which saw the greenback in the parallel market climb another 40 cents and close at 11.90 and 11.95 Pesos purchase and sale prices. During the week the US dollar soared 1.15 Pesos, and closed the week with a gap of 75.6% between the official dollar exchange and the 'blue' dollar.

 Tourists with planned vacations overseas, speculators who believe there is no cap so far for the greenback in Argentina, and total lack of confidence in the economic policies of the current devalued administration of President Cristina Fernandez are feeding into a frantic purchase or chase after the blue dollar.

Meantime the official dollar, sold at banks and money exchange houses, mainly used for foreign trade and limited tourist overseas activities closed at 6.755 and 6.805 Pesos, and some last minute sale from exporters helped the Central bank end Friday with a 30 million dollars net increase in international reserves.

The bank also tried to drain liquidity by selling bonds in the local market with relative success.

Meanwhile in neighboring Uruguay where many Argentines prefer to spend their holidays, the US dollar was selling at 12.50 Argentine Pesos.

Argentine cabinet chief Jorge Capitanich spoke about the run on the US dollar which is climbing day after day and insisted the positive side of the policies applied by the Kirchner couple, Nestor and Cristina, and their impact on the central bank international reserves.

”It was actually 'a virtuous policy' (accumulating reserves) since Argentina has been repaying debt, ('which this government did not contract or take new loans at usury cost'), the level of international reserves would be far much higher.

”We would then have 73bn dollars in reserves and not the current level (just below 30bn)“ said Capitanich who recalled that twenty years ago when the fixed exchange rate: one dollar equivalent to one US dollar, the level of reserves was 21.9bn, and during the last week of December 2013, they stood at an average of 36bn.

Nevertheless the cabinet chief reiterated that the ”Argentine financial system in Argentina is liquid and solvent”.

Top Comments

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  • Mastershake

    TWENTY years ago?! Considering that 20 years ago (let's say 2013 vs 1993), the USD was worth 62 percent more(62% inflation for 20 years), that means the equivalent(of 21.9 billion) today would be 36 Billion dollars. Considering that Argentina's economy was an abysmal failure in the late 80's and early 90's, I'd say that's not a good reference point. So basically, he's saying that currently, the USD holdings are significantly worse (less than 30 vs 36) than 20 years ago, when the economy was in disarray. Um....congratulations??

    Jan 18th, 2014 - 07:34 am 0
  • toooldtodieyoung

    “US dollar approaching the 12 Pesos mark in Argentina”

    The Peso is falling
    Look, there it goes.
    Where it will stop,
    Nobody knows..........

    Jan 18th, 2014 - 09:02 am 0
  • PacRim Jim

    Brazil is a country of the future, and always will be.
    Argentina is a country of the past, and always will be.

    Jan 18th, 2014 - 09:48 am 0
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