The Argentine peso hit a record low on the black market during a tough economic time

Buenos Aires ( – Argentina’s peso slumped in the widely used parallel market on Thursday, hitting a record low against the US dollar as worries about the Latin American country’s economy increase, with inflation at 104 percent, reserves dwindling. and drought hit exports.

The black market peso, one of several unofficial exchange rates that have flourished as strict capital controls limit access to the official forex market, weakened nearly 4.0 percent to 438 per US dollar, roughly double the official 218 peso.

Exchange rate blue chip swap or CCL (contado con liqui) was at 433 pesos per dollar and the MEP was at 421.3 per dollar, traders said.

Argentina, the world’s largest exporter of processed soybeans and a major supplier of corn, beef and wheat, is struggling to maintain economic stability as a historic drought stifles foreign currency earnings, spikes local prices and drains central bank reserves.

Government efforts to spur soybean exports at a preferential exchange rate for producers have failed due to low oilseed reserves linked to the drought and fears about currency depreciation that have kept farmers from holding stocks.

That further pressured the central bank’s already weak reserves, forcing it to sell dollars.

“Small income from agriculture has forced the central bank (BCRA) to intervene as it did before the launch of the ‘soy’ dollar,” local consultancy Portfolio Personal Inversiones said in a note.

“(BCRA reserves) stocks are so small that they cannot sustain negative flows of this magnitude for a few more days. According to our estimates, net reserves closed yesterday at USD 679 million, the lowest since March 2022,” he added.

Argentina heads to a tough general election in October, with the centre-left ruling Peronist coalition under pressure at the polls and facing the prospect of defeat, adding to the uncertainty.

Also read: Argentina raises interest rates by 300 basis points as inflation soars
Also read: BI intervenes to prevent the weakening of the rupiah from continuing due to the drop in the peso
Also read: Argentina again applies a capital control policy, assets fall

Translator: Apep Suhendar
Editor: Faisal Yunianto


Source link