(FILE) 5 peso bills in Buenos Aires (Argentina) January 22 2021. EFE/Juan Ignacio Roncoroni

US dollar skyrockets in Argentina, breaking the 1,000 peso barrier

Buenos Aires, Oct 10 (EFE). – The “blue” dollar broke a new historical record in Argentina on Tuesday, surpassing the 1,000 pesos per unit barrier, opening a gap close of 190% difference with the official exchange rate, amid the country’s unstable macroeconomic situation and pre-election uncertainty.

The “blue” dollar, to which savers turn due to the restrictions on obtaining foreign currency in the official market, reached a nominal record 105 pesos (11.1% increase) since Tuesday, got to a record 1,050 pesos. In contrast, the official exchange remains at 365.50.

Argentina is in dire straits, facing a growing year-on-year inflation that reached 124.4% in August and a poverty rate of 40.1% in the first half of 2023 while also dealing with a shortage of reserves in the Central Bank.

Concerning economic data, that adds to the continuing monetary problem and the 22% devaluation recently implemented by the Executive Branch on August 14th, after Libertarian candidate Javier Milei won the primary elections.

According to financial experts, the last ingredient in the explosive cocktail is Milei, who called the peso “excrement” on Monday and asked savers to liquidate their local savings for US dollars.

Various private banking associations in Argentina issued a statement calling for “democratic responsibility” that requires “solid” institutions and “mature” leadership.

“Candidates who want to govern public affairs must be responsible in their campaigns and public statements. They must avoid making unfounded declarations that create uncertainty among the people and volatility in financial variables,” they said in the document.

The situation is aggravated by the knowledge that the candidate with the most votes in the primaries and the favorite to win the presidency intends to implement an economic plan to dollarize the Argentine currency.

The measure that has been called unreal by economic analysts will require a devaluation, causing fear among peso savers looking for support and whose savings will be seriously eroded.

Economist Gustavo Ber, in his report Ber Study, said that “the anxiety of operators regarding the outcome of the elections, as well as the anxiety of the political and economic scenario for ’10-D’ (December 10, when the winning candidate of October 22 takes office), add up to serious economic imbalances, which will require consensus and support to implement a stabilization plan.” EFE