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© Reuters. Argentina’s appetite for dollars drives prices to new records
Buenos Aires, Nov 4 (.) .- The growing appetite for US dollars in Argentina, fueled by doubts about the weak economy of the South American country, has pushed the multiple prices of the US currency to new record levels this Thursday.
The so-called “blue dollar” (informal retail market) reached a new maximum of 200 pesos per unit for sale, although at the end of the day it cut its value to 199 pesos.
Meanwhile, the price of the dollar in the formal retail market, where operations are very limited by various restrictions imposed by the Argentine authorities, advanced 25 cents and also reached a new maximum of 105.25 pesos per unit for sale to the public in the state-owned Banco Nación.
Foreign exchange pressures have been growing in recent days, as the legislative elections of November 14 approach and investors’ doubts about the complex future of the Argentine economy increase.
The strong monetary issue registered since the electoral defeat of the ruling party in the primary elections of last September and the acceleration of the already high inflation in Argentina feed the fears among investors of a potential greater devaluation of the peso after the elections next month.
DEMAND FOR COVERAGE
Among the most sophisticated investors, hedging operations are also reflected in the prices of the so-called “financial dollars”, which are obtained through the sale of shares and public bonds at prices that this Thursday also broke records: 181 pesos in operations regulated by the Central Bank and 208 pesos in operations agreed between private parties.
Even the price of the wholesale dollar, regulated by the Central Bank and accessed, for example, by importers, hit a new maximum of 99.95 pesos on Thursday.
“One week before the elections, as generally happens, people want to be covered against what may happen with the exchange rate after knowing the result,” said Nicolás Chiesa, director of the firm Portfolio Personal Inversiones (PPI ).
For the analyst, it is “difficult” to follow such a high gap between the different prices and that “uncertainty” generates “a lot of pressure on the different types of dollar these days.”
CENTRAL BANK IN LA MIRA
Investors are not clear when and how Argentina will close a refinancing agreement for its heavy debt with the International Monetary Fund or how complex macroeconomic imbalances will be corrected, with high inflation and fiscal problems.
Meanwhile, they look closely at the Central Bank, particularly its levels of issuance of Argentine pesos to assist the Treasury and the loss of monetary reserves due to daily sales of dollars to try to sustain the exchange rate.
According to investment firm Puente, in October the Central Bank transferred 353 billion pesos (about 3.35 billion dollars) to the Treasury, a monthly record level.
Meanwhile, the total reserves of the Central Bank are around 42,600 million dollars, but its net reserves would be, according to PPI calculations, 3,599 million, while the net liquid reserves (excluding special drawing rights of the IMF and) would barely be of 778 million.
For the economist Gustavo Ber, this daily “drain” of net reserves continues to arouse “growing concerns” among operators, “since it is recognized that the dynamics are not sustainable and thus measures should be adopted after the elections.”
“The references to the freest dollars continue to reflect that the search for coverage by economic agents continues to be the order of the day in the face of the challenges to face on the other side of the 14-N wall,” he observed.
