- EFE and AFP
- BUENOS AIRES
Exchange rate tensions in Argentina escalated this Tuesday as parallel US dollar highs recovered; This scenario prompts the government to urgently renegotiate the terms of the current refinancing deal with the International Monetary Fund (IMF). . ).
Dollar rates, which started surging in alternative markets a week ago, hit new historic signs on Tuesday: The unofficial dollar (blue) closed at 495 pesos per unit and the CCL fiscal dollar closed at 466.08 pesos.
This represents a 7% increase in the informal market in one day.
DEFORMATION. But it also implies that the “gap” between the unofficial listing and the listing at banks and bureaux de change – a highly restricted market for entry – has risen to 118.5%, indicating strong exchange rate distortion.
Portfolio Personal Inversiones (PPI) warned Tuesday that “at these levels, there is a logical fear of a discrete appreciation in official exchange rate growth and as a result, the real economy is beginning to bog down in uncertainty about replacement costs.” ) in a report.
In Argentina, many prices in the economy – almost 40% according to CMF Bank calculations – are determined by the price of the parallel dollar, and in the event of a sudden change in the exchange rate, companies and companies increase the prices of their products and services when inflationary momentum is already strong (annually in March) 104.3%).
NO RESERVATION. Renewed currency fluctuations are part of a complex political and economic context.
While Argentina’s hunger for the dollar for news often grows during election years, this time greed for the US currency accelerated six months before the presidential election because of strong interns on several political fronts and a lack of definition among pro-government supporters. and dissidents on what needs to be done to resolve the country’s deep macroeconomic imbalances.
Economist María Castiglioni explained to the TN news channel that in a context where “inflation is still far from its official target” and “continues to accelerate”, Argentines are “fleeing” the dollar to consolidate their power while shopping.
According to economist Gustavo Ber, there is “a heightened risk perception among operators” who notes that “managing economic imbalances in the current political scenario is becoming increasingly complex”.
With unlimited reserves of just $1,114 million, according to PPI calculations, the central bank’s reserve shortfall has been exacerbated by the sharp fall in foreign exchange earnings from agricultural exports following the severe drought that hit Argentina during its last agricultural campaign. .
To bolster reserves, the executive has promoted mechanisms such as the “soybean dollar,” which encourages the agricultural sector to sell produce at a lower than the official exchange rate to boost income. But a severe drought and the advancing blues limited the scope of this venture.
The central bank’s limited intervention capacity, coupled with the larger currency issue, allows for this rapid adjustment of dollar parallel prices.
FUND PROGRAM. In this scenario, Argentina’s Economy Minister Sergio Massa assured on Tuesday that the government will use “all the tools of the state” to adjust the fiscal scenario, and spoke of a “renegotiation” of the agreement signed with the IMF in March 2022 has been signed. debt to refinance approximately $45,000 million in the agency.
Regarding the agreement with the goals of fiscal adjustment, austerity and reserve building, which Argentina has always wanted more of, Massa said: “We have informed the IMF of the restrictions that burden Argentina and we will continue to renegotiate the program. change.” said. There are more challenges.
495 pesos per dollar on the Argentinian parallel market; A new record was set on Tuesday.
Main opposition front concerned about fragile economy
Argentina’s main political opposition front, Together for Change, expressed concern on Tuesday about the “serious” economic situation in the South American country.
“We are deeply concerned about the economic fragility of Argentina, the state of the government and the lack of realism of the President (Alberto Fernández),” the opposition coalition said after the party leaders’ meeting with the juntas for change.
This leads to greater economic problems and a deterioration in the purchasing power of workers and pensioners.”
Frontline leaders agreed to assemble the Together for Change economics teams next Tuesday to “analyze the dire economic and social situation in the country”.
At the meeting, the leaders of the Radical Citizens’ Union, the Citizens’ Coalition, the Republican Proposal (Pro) and the Federal Republic Meeting analyzed the country’s political, economic and social situation and identified the “main lines of action” of “Together for change”. . It is preparing for the primary elections in August and the parliamentary elections to be held in October this year.
The meeting took place amid sharp exchange rate tensions, in a challenging scenario of tight foreign exchange reserves, a budget deficit and rising inflation.
Meanwhile, President Fernández blamed the dollar’s rise on the operations of the “right” and supported Miguel Pesce, the governor of the Central Bank. “It is a permanent exercise of Argentine law,” Fernández told the press, convinced that these dissidents “spread the rumors in the morning, operate all day, and when the afternoon is over, they take their profit from the foreign exchange market and so damages it.” Savings of the majority of Argentines”.
Source: Ultimahora
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Karen Clayton is a seasoned journalist and author at The Nation Update, with a focus on world news and current events. She has a background in international relations, which gives her a deep understanding of the political, economic and social factors that shape the global landscape. She writes about a wide range of topics, including conflicts, political upheavals, and economic trends, as well as humanitarian crisis and human rights issues.
