Argentina’s black market exchange rate hit a record 1,040 pesos per dollar Tuesday, continuing a sharp sell-off as Argentines rush to buy greenbacks before the October 22 presidential election.
The rate, known locally as the “dollar blue,” was near half that level as recently as July, highlighting the panic that’s gripping markets and population at large as inflation surges above 120 percent while frontrunner Javier Milei advocates replacing the peso with the US dollar as the nation’s currency.
Even a week ago, the illegal rate closed at 800 per dollar, according to data tracked by websites DolarHoy.com and Ambito. Finance Secretary Eduardo Setti downplayed the peso’s sell-off in the black market Tuesday, noting the illegal rate often trails other parallel rates instead of being out in front.
“It’s evident there’s just four guys operating illegally to create fear and uncertainty about people’s savings,” Setti posted on the platform X, formerly known as Twitter.
Official inflation data will be published Thursday with economists surveyed by Bloomberg forecasting an annual rate of 135 percent, which would be the fastest since Argentina exited hyperinflation in the early 1990s.
On Monday, Milei openly recommended Argentines should stop saving in pesos, remarks that drew criticism from across political and financial spectrum for stoking fears.
To be sure, other factors are fuelling the peso’s plunge. Economy Minister Sergio Massa, who is also the incumbent party’s presidential candidate, is printing money to finance government spending in a bid to win more votes, measures that will likely fuel inflation in the future.
Argentina has a complex assortment of exchange rates between the official rate, frozen by the government at 350 per dollar, and a host of parallel or implied exchange rates. The black market rate is the most famous in the country, used largely for all-cash transactions. Another rate, referred to as the blue-chip swap, is legal and traded in local financial markets.
by Patrick Gillespie & Ignacio Olivera Doll, Bloomberg