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ECONOMY | 26-01-2022 18:34

Peso weakens against dollar in parallel exchange markets

Argentina's currency depreciated even further on parallel foreign exchange markets on Wednesday, hitting a record 221 pesos per US dollar.

Argentina's currency depreciated even further on parallel foreign exchange markets on Wednesday, hitting a record 221 pesos per US dollar.

Tensions are increasing on the currency markets ahead of a scheduled US$730-million payment to the International Monetary Fund (IMF) due this Friday. The government is currently seeking a new financing programme with the multilateral lender to replace the US$57-billion credit-line it agreed back in 2018, of which it has received US$44 billion.

Under the current terms of the deal, Argentina faces maturities of some US$19 billion this year, an amount President Alberto Fernández has said the country can not pay.

With talks said to be stalled, uncertainty is dominating the parallel exchange markets. Wednesday's record high means that there is now a difference of 111 percent between the official exchange rate of 110.15 pesos per dollar and the parallel or 'blue' dollar.

"In Argentina, every time there is a crisis or the perception of a crisis, the population goes out to buy dollars," Gabriel Torres, a senior analyst at Moody's risk rating agency, told the AFP news agency.

As yet, the government has not confirmed if or how it will meet this Friday's US$730-million payment, the first of the year. 

Argentina must make payments this year totalling US$19 billion, with another US$20 billion due in 2023 and US$4 billion more in 2024. The goverrnment is seeking an extended facilities agreement that would lengthen payment terms and replace its current stand-by programme.

With restricted access to international credit markets and no more international reserves available, the Central Bank has limited its interventions in the foreign exchange market in recent weeks.

In Argentina, currency controls have been tightening since 2019. Individuals can only legally purchase US$200 dollars a month at the official exchange rate.

– TIMES/AFP

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