First modification:
The price of the US dollar in Argentina’s parallel market has not stopped breaking consecutive records and is on its way to touching the barrier of 800 Argentine pesos, after the recent devaluation of the official exchange rate that followed the primary elections. What’s going on?
In Argentina, the loss of confidence in the local currency is directly proportional to the appetite for dollars, as citizens see buying the currency as the best way to protect their savings from runaway inflation.
The Argentine peso on the parallel market plunged this week after a shock primary election result that raised the possibility that libertarian economist Javier Milei would win the October presidential election.
🇦🇷 Victory for Javier Milei, supporter of the free market and political outsider, shakes the Argentine economy: The country’s sovereign bonds fall, the peso is devalued and experts estimate 190% inflation at the end of the year
Here we tell you everything: https://t.co/ROz5LDlp6Q
— Bloomberg in Spanish (@BBGenEspanol) August 16, 2023
The local currency, which has suffered the ravages of the crisis for a long time and has been subject to controls for years, is traded daily to the sound of at least a dozen different prices, ranging from the official, through numerous categories, to the most popular known as ‘blue’.
Between these two references, the price gap is greater than 100%: while the official dollar costs 350 pesos (a value frozen by the Central Bank until the presidential elections), in parallel trade its price has skyrocketed by almost 30% this week up to 780 pesos.
“Beat inflation”, the daily struggle
Last Monday, the central bank devalued the official exchange rate by 18% and raised the reference interest rate to 118% to protect the peso and curb inflation, which already exceeds 113% per year and squeezes the savings and salaries of people.
With economic uncertainty on their backs, many Argentine households have rushed to convert their pesos to dollars as a more stable way to protect their savings, and are willing to pay more than double the official rate given the restrictions that exist to access it. .
“I buy at the beginning of the month and I regulate until the end of the month to see how long I can continue with some consumption and how much I have to restrict. Sometimes, when they anticipate that the dollar will rise, I make a larger purchase thinking of beating inflation, which is what all Argentines have tattooed,” sociologist Natali Ini told AFP.
Inflation in that South American country, one of the highest in the world, accumulates 60.2% in 2023 until July, according to the official Institute of Statistics, while, in the annual comparison, that is, compared to the same month of 2022 , the rise in prices already touches a scandalous 113.4%.
With AFP, Reuters and EFE
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