MercoPress. South Atlantic News Agency

Argentina: in chaotic trading dollar jumps 12.4% in one day to 8 Pesos in the official market

The central bank lost another 180 million dollars in reserves

In a day of chaotic trading the Argentine Peso on Thursday again plummeted against the US dollar losing 12.4% of its value in the official market, ending the day at just over 8 Pesos. In earlier operations the dollar was selling at 8,31 Pesos until the Central bank decided to intervene helping to cool the market.

Meanwhile in the parallel or 'blue' market the greenback price climbed another 91 cents and ended at 13.06 Pesos. Teams of central bank and tax office inspectors supported by police raided some offices in the Buenos Aires stock exchange and in the financial district looking for 'illegal' operators of hard currency, which virtually ceased operations. Similarly given the uncertainty of the dollar market and its future evolution, tourist agents stopped or postponed sales in Pesos and only worked with hard currency. An idea of the uncertainty in the money exchange market is the fact that in a single day the dollar price jumped 12.4%, and so far this month has increased 22.7% its value in Argentine Pesos. To give an idea of the depreciation spiral, until 19 November last year the Peso had lost 22.8% and ended 2013 with a devaluation of 32%. For the Argentine central bank is was another day of eroding international reserves, having lost 180 million dollars to try and keep the greenback at 8 Pesos. Reserves now stand at 29.263bn dollars, having lost so far in the week 500 million dollars. The board of the Argentine Central bank held its regular Thursday meeting at midday but not much information leaked out, besides the fact that "we discussed events in the money exchange market and the foreign payments agenda", according to a reliable source in the bank. Nevertheless Friday could again prove to be a day of hectic money trading since on Wednesday the central bank simply did not intervene, confirming with its absence the depreciation of the Peso and a 'hands-off' policy, but on Thursday at mid afternoon decided to pump dollars into the market. Money operators are trying to guess which is the Dollar/Peso equilibrium point the central bank is targeting. Meanwhile in the Buenos Aires stock exchange the Merval index was down 2.2% with YPF shares dropping 9.2%, since most of the oil and gas company revenue is in Pesos, while other Argentine companies that work mostly overseas Tenaris (oil pipes) and Aluar (aluminum) climbed 7.4% and 7.8% respectively. In Casa Rosada government officials said the current devaluation of the Peso is the result of the interaction between supply and demand in the money exchange markets. "Anyhow we are closely monitoring different operations in the context of a strong surge in the official dollar".