The US dollar kept climbing in Argentina and ended trading on Tuesday above the 15 Pesos threshold after having advanced 30 cents on Monday and 54 cents today. Sunday's electoral result in the City of Buenos Aires where the pro-business PRO party just managed to scrape by with victory, has triggered growing nervousness and speculation among savers and traders.
The 15.09 per dollar in the so called 'blue' or informal market was a record for this year and the first time that rate had been reached since September/October last year.
Meanwhile the official dollar rate closed higher at 9.17 Pesos in banks and foreign money exchange agencies, meaning the gap between the two markets stands at approximately 60%.
On Sunday Buenos Aires city mayor Mauricio Macri's party and the candidate to succeed him, just managed to win in the runoff, despite opinion polls anticipating a difference of at least fifteen points.
What was expected to be an overwhelming victory, which Macri had chosen to officially launch his presidential bid, turned out to be a sour event, and was hailed as a crushing defeat by president Cristina Fernandez, her Victory Front acolytes and handpicked presidential candidate Daniel Scioli.
Macri nevertheless launched his bid and promised, if elected, to maintain several of the Cristina Fernandez administration social benefits, and keep YPF, Aerolineas Argentinas and the trains system under government management.
This gave Cristina Fernandez further ammunition to attack Macri and scared the hopeful's supporters who are longing for free market conditions, an end to controls on prices, services, exports and money markets.
In effect market analysts said that Macri's speech only reactivated the demand for US dollars and was the worst possible message for market expectations.
Meanwhile the government argued that the surge could be explained by the winter holidays when many Argentines chose to travel overseas and need hard currency, plus the usual claim blaming speculators' intent in damaging the Argentine economy and its many social achievements by the Kirchnerite government, ahead of the coming October elections.
Anyhow the statement was supported with strong fines on several money exchange houses allegedly caught red handed dealing with the parallel or 'blue' dollar, by combined police and security forces raids in the city's financial district
But a former president of Argentina's Central Bank, Aldo Pignanelli, was far more caustic and said the federal government “woke up the beast” as he analyzed the recent surge in the “blue” dollar and conditions in coming months.
“The hike in the blue worries because when the dollar moves, prices move (even though) there is no direct relation between the increase in prices and the dollar,” said Pignanelli adding this creates uncertainty
“The blue dollar is a guide for those who want to save or cancel an import because they have the access to the official (dollar) restricted,” and “whenever there are elections, there is always a sector of society seeking to protect itself.”
Still, the economist considered “there are several issues” taking the parallel dollar up, adding the US currency was “strengthening at a global level.” “Almost all countries are devaluating,” Pignanelli pointed out. “I am not alarmist about what can happen with the dollar in the upcoming days, but the government will do something.”
In another part of the interview, Pignanelli referred to Argentina’s current legal battle against so called speculative or “vulture funds” and access to global money markets.
“We have no access to transparent credit, we had to turn to China which is not that all clear,” he stated and pointed out “in Argentina the capital cost is very high, and that changes the investment decision.”
“We have to wait for the change of government, for a new stage to begin,” Pignanelli finally said in reference to the next five months leading to December 10, when Cristina Fernandez will be stepping down.