Argentina’s Economy Minister Sergio Massa vowed to staunch a collapse in the nation’s parallel currency rates as the peso’s worth slumps to record lows.
The nation will use “all the tools of the state to stabilize this situation,” Massa wrote on Twitter, invoking plans to address currency troubles as officials renegotiate a US$44-billion lending programme with the International Monetary Fund.
Argentina’s key parallel exchange rate, known as the blue-chip swap, is in free-fall as locals rush to buy the US dollar amid rampant inflation, falling reserves and speculation over a devaluation of the official peso. The blue-chip rate has fallen for 10 consecutive days to a record low of 484 per dollar.
The peso is now worth less than half on the parallel market than it is in the official one.
Another parallel rate, known locally as the “dólar blue,” neared a record 500 pesos per dollar on the streets of Buenos Aires, according to dolarhoy.com, a widely used financial-news website that tracks the peso.
The nation’s inflation passed 100 percent in February, while the central bank’s foreign currency reserves fell to a seven-month low last week. A record drought is also expected to push the country into recession, spurring plans to renegotiate the IMF programme.
In the past, the IMF has put pressure on Argentina to devalue its official exchange rate to encourage exporters to bring dollars back into the country and rebuild dwindling reserves.
President Alberto Fernández said last week he won’t run for re-election, upending a race within the ruling Peronist coalition to pick a candidate ahead of October elections.
He blamed the political opposition for extra market volatility.
“This isn’t the first time we’ve seen this,” Fernandez said in a televised statement on Tuesday. “It’s a permanent practice of Argentina’s political right-wing.”
by Scott Squires, Bloomberg