MercoPress. South Atlantic News Agency

Blue dollar plummets in Argentina

Massa said the swap with China meant “great news”

The “blue” (a euphemism for “black market”) dollar plunged on Wednesday, closing at AR$ 885/905 (buy/sell), down from AR$ 985 the previous day, after the extension of the swap with China was announced and raids on illegal exchange parlors known as “cuevas” (caves) intensified, leading to new arrests, it was reported in Buenos Aires.

Prior to the August 13 Open, Mandatory and Simultaneous Primary Elections (PASO), the blue dollar traded at AR$ 607, but last week it reached AR$ 1,050, so Wednesday's figures represented a drop of AR$ 145 in little more than a week. The gap with the official rate fell to 158.5% from nearly 200% eight days ago.

Economy Minister and presidential candidate Sergio Massa said that the fight against speculators who create uncertainty would continue after the arrest of the alias “El Croata” - believed to be the ringleader of the “cuevas” scheme - and six others. “Probably today there will be more than 50 raids and arrests as part of the investigation into attempts to speculate - beyond the statements of any candidate - by some criminals who, in a situation of uncertainty, generate profits against the savings of the Argentine people,” Massa said Wednesday.

The Argentine Central Bank (BCRA) said the additional $6.5 billion from the swap would be used to keep the exchange rate in check to avoid “the recent 'panic' values,” as Deputy Economy Minister Gabriel Rubinstein put it.

President Alberto Fernandez announced from Beijing that Chinese President Xi Jinping had confirmed the swap extension.

”We just had a very good meeting with President Xi Jinping. We presented our problems to him and once again the Chinese government responded to our requests and gave us a very important help: what they did was to extend the use of the swap that they had already granted us. We had asked for 5 billion dollars and they granted us 6.5 billion dollars, (47 billion yuan), which means a great relief for Argentina, it means that reserves will enter the country,“ the president said in a radio interview after his 40-minute meeting with the Chinese leader.

”Every time we have gone through a difficult moment, Xi Jinping's government has supported us. This is important so that production does not stop,“ Fernández also said.

”We have reached this agreement with China while a madman here is proposing to break relations with that country and others that have helped us in these difficult times,“ the head of state added, referring to Libertarian congressman and presidential candidate Javier Milei.

Fernández insisted on thanking the People's Republic of China for its financial support in the face of ”the irresponsible debt that the previous government” contracted with the International Monetary Fund (IMF).

Massa said the swap meant “great news” because it “gives us a lot of maneuvering capacity to strengthen the reserves, to accelerate the payment of SME imports, to have the capacity to intervene in the market and also the tranquility of having a guarantee so that we do not have pressure on the financial dollars.”