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ECONOMY | 09-10-2023 22:08

'Blue dollar' surges to record high in Argentina as Javier Milei reiterates dollarisation plan

Libertarian presidential candidate Javier Milei reiterates desire to dollarise Argentina's economy as parallel 'blue dollar' surges to record 945 pesos per greenback.

Libertarian presidential candidate Javier Milei, the favourite to win the October 22 elections, reiterated on Monday that he intends to dollarise Argentina's economy if elected president as he advised savers to avoid the peso.

"Never in pesos, never in pesos. The peso is the currency issued by the Argentine politician, so it can't even be worth excrement, because that rubbish is not even good for fertiliser," Milei said in a typically outspoken interview with Radio Mitre.

Speaking a day after the presidential hopefuls clashed in a debate, Milei went on to recommend that Argentines not renew fixed-term deposits denominated in local currency, a day after a debate between the presidential hopefuls.

The value of the dollar on the official market, controlled by the government, remained at 365 pesos on Monday. But in contrast, in the informal market, the parallel or 'blue dollar' soared to a record 945 pesos per greenback – a gap of more than 160 percent with the official rate.

Milei, who has gone from outsider to frontrunner after winning primary elections on August 13, said days ago that "the higher the dollar is, the easier it is to dollarise" the country.

On Monday, the Central Bank assured that "the Argentine financial system presents a solid situation of solvency, capitalisation, liquidity and provisioning" and that its monetary policy "seeks to maintain the purchasing power of savings through the remuneration of fixed-term deposits."

"The savings of Argentines deposited in the financial system are protected by deposit insurance and by the role of the Banco Central de la República Argentina (BRCA), which acts as lender of last resort" or guarantor, the bank said in a statement.

Milei reiterated in his interview that he has "the conviction to close the Central Bank, which is done operationally by dollarising."

"But then people will choose the currency they want," he added.

Argentina is suffering from a severe shortage of foreign currency that is eroding its already dwindling international reserves, amid an inflationary process that has pushed the price index to more than 120 percent in 12 months to August.

On August 14, the day after Milei emerged as the most voted for candidate in the PASO primaries (29.8 percent), Economy Minister Sergio Massa, the presidential hopeful for the ruling Unión por la Patria coalition, devalued the peso by nearly 20 percent.

 

– TIMES/AFP

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