The US dollar fell Tuesday yet again, making it the seventh straight time the peso manages to recover due to the government's “cash-drought” measures. But that did not change the fact that According to the International Monetary Fund’s latest report, Argentina will have the fifth highest inflation rate in the world, which is expected to reach 41.5 by the end of the year..
The International Monetary Fund anticipates two years of recession for Argentina in a context of increasing economic misbalances and uncertainty because of the ongoing litigation with the holdouts or 'vulture funds', as well as inflationary tensions.
The US dollar in the Argentine official market on Wednesday soared 23 cents to 7.125 Pesos, establishing a new record in the midst of uncertainty and frantic trading. The last time the greenback price climbed 3.4% in a single day was back in April 2002. Since the beginning of the year the Argentine peso has plunged 9% against the dollar and a year ago the dollar stood at 5 Argentine Pesos.
The US dollar in Argentina continued to climb on Wednesday and reached new highs both in the official market and in parallel trading or the 'blue market'. The official rate closed at 6.75 Pesos to the greenback while the 'blue' reached a record 11.25 Pesos (selling price) with a 66.5% gap between both markets.
Argentina tightened the ‘dollar clamp’ a further notch by including mortgage credits, which means people wanting to become home owners will not have access to the US currency.
The Argentine economy is expected to grow 1% this year with manufacturing activity virtually stagnant, according to the head of a leading economic consultancy agency in Buenos Aires who nevertheless admits that the government stats “will probably show a better performance”.
The Argentine government is further tightening the US dollar clamp. On Thursday the Central bank announced that state-run banks and agencies will be the only ones officially allowed to operate foreign currency exchange offices in airports and ports.
Three Argentine economists, particularly close to the government of President Cristina Fernandez have admitted that the Argentine Peso is overvalued and is causing problems for non commodity exports which need to be addressed.
The strict and tightening US dollar purchase restrictions imposed in Argentina were clearly exposed in the banking system dollar deposits and loans during the last week of July when they dropped 3%, having accumulated 43% in the last few weeks, according to official data from the central bank.
An Argentine businessman who was sentenced in Uruguay to home arrest following a car accident in which one person died remains at the location of the crime because his family in Argentina have been unable to purchase the 5.000 US dollars bail needed for his release.