MercoPress. South Atlantic News Agency

“Blue” dollar in Argentina further plummets as market waits for new rules

With the latest changes in the Central bank, Economy minister Axel Kicillof has become the most powerful official of the Cristina Fernandez administration

The US 'blue' or informal dollar plunged 35 cents at the end of trading on Monday in Argentina to 14.95 Pesos after dropping another 20 cents last Friday, amid uncertainty about the new Central bank authorities policies and what is anticipated will be tighter controls on 'illegal' trading.

Meanwhile, the blue-chip swap rate continued last week's decline and plunged 83 cents to 14.17 Pesos to the dollar, while the stock exchange rate in Buenos Aires bucked the trend by advancing 13 cents to 14.21 Pesos.

The formal rate closed a cent up at 8.49 Pesos per dollar, after ending two cents higher on Friday. This is the lowest price since September 16 with a gap between the two markets of 76%.

Following his appointment as new Central Bank head, Alejandro Vanoli raised fixed-deposit interest rates last week in an attempt to encourage savings in Pesos. However this means that the interest rate on deposits that was fixed by each bank, now has a floor linked to an index of government bonds thus limiting banks latitude.

Also on Monday the Argentine government made more changes in the Central bank naming two men close to Economy Minister Axel Kicillof who now has virtual control over all the Argentine economy decision making centers.

Former deputy superintendent of Financial and Exchange Institutions Germán Feldman is to replace Cosme Juan Carlos Belmonte as superintendent, and Pedro Biscay –former Office of Economic Crime and Money-Laundering (PROCELAC) official-will join him assuming his previous position as deputy superintendent.

The changes were published in the official bulletin, signed by president Cristina Fernández, cabinet chief Jorge Capitanich and Economy minister Axel Kicillof.

Meanwhile Buenos Aires stock exchange dropped 4.3% following on Judge Griesa's order that the Argentine government reinstates the Bank of New York Mellon, BONY as trustee for bondholders payments and 'reverse the steps taken' with the approval of the so called Sovereign Payment law that replaced it with the country's Nacion Fideicomisos.

This was the Judge's first ruling since declaring Argentina in contempt of court and “it's not good news for the markets”, according to stock brokers.

Finally Argentina's country risk climbed 1.6% to 750 basis points.