An exchange office on Florida Street in Buenos Aires.ENRIQUE GARCIA MEDINA
The foreign exchange market in Argentina began this Monday with ups and downs after the victory of Peronism in the first round of the parliamentary elections on Sunday. The different exchange rates that coexist in the South American country, more than a dozen, have undergone different changes in the first operations. While the official dollar remains at 365 pesos, a level maintained since the government devalued the national currency in August, the so-called blue dollar on the parallel market is trading at 1,050 pesos around midday, 150 more than at the start of the working day. Other types, such as the MEP dollar used for exchange transactions, remain stable.
Argentines waited this Monday for the market’s reaction following the victory of current Economy Minister Sergio Massa in the first round of elections. Massa won this Sunday with 36.68% of the vote ahead of Javier Milei, leader of the far-right party La Libertad Avanza, who received the support of 29.98% of voters. Both will meet in a second round on November 19th and until then the scenario remains uncertain.
This Monday, the values of the official dollar and most exchange rates in Argentina remain stable around midday. The value of the dozen listings that coexist to allow savers, tourists, exporters or exchange operators to use currencies has not made any big jumps. However, one of the most abrupt changes occurred in the CCL dollar (including settlement), which fell by 109 pesos to 1,001.5. The informal or blue dollar sold on the street is one of the variations that Argentinians pay the most attention to and has also changed significantly this Monday: around midday it sells for around 1,050 pesos, while in the First courses in the morning were 900.
Elisabet Bacigalupo, chief economist at consulting firm ABECEB, believes the climate is “calm like in Argentina.” “In the short term, there is a little more calm in an environment in which uncertainty will remain high because the final word has not yet been spoken,” explains the economist, adding that there is a perceived lower demand for foreign exchange on the market. “Argentina had excessive volatility in the previous week. We saw a sharp decline in the demand for pesos and this process will now stop,” he explains. Salvador Vitelli of consultancy Romano Group adds: “The market is moving from setting prices in the scenario of possible disorderly dollarization to a scenario of devaluation, which may not be so abrupt.” The economist predicts that this month will be “full of uncertainty” and that “every step” will be “more than decisive for political purposes”.
The victory of the ruling party candidate did not cause the shock that Milei’s surprise victory in the August 13 primary did. On that financial Black Monday, the government devalued the peso by 18.3% to 365 units per dollar, the value that remains to this day. The collapse was repeated at other rates, including on the unregulated parallel market, which at the time confirmed an exchange rate of about 685 pesos per US dollar.
As economy minister, Massa promised to maintain the official wholesale exchange rate until November 15 and then implement a monthly devaluation of 3%. Argentina is negotiating to refinance $44 billion in debt that Mauricio Macri’s government took on with the International Monetary Fund in 2018. The government argued that the devaluation after the primaries was part of the agreement reached at the end of July. The economy was one of the axes of the election campaign in a country where inflation reached 138.3% year-on-year in September; Poverty is over 40% and central bank reserves are in deficit.
The candidates propose different recipes to get out of the crisis. While Massa, who is now in charge of managing the country’s economy, proposes more government spending and the commitment to national industry, the ultra-liberal defends the reduction of the state to a minimum and the dollarization of the economy because, as he said, the peso is “worth”. excrement. The economist called for people not to save in pesos 10 days before the election, and hours later the dollar exceeded 1,000 pesos a unit, a record high that raised tensions on exchange rates. The government then intensified its measures to confiscate foreign currencies from the illegal market. “The higher the dollar price, the easier it is to dollarize,” Milei said in an interview. In a month, Argentines will go to the polls again to choose between the two.