Online Currency and Counterfeit Dollars: Officer's Quoted Price and Parallel Dollar Value Minute by Minute for Monday, August 11
In the heart of Argentina, the upcoming Treasury bond auction on Wednesday serves as a significant test for the market amidst rising economic turbulence.
The blue dollar, an unofficial parallel market rate, has been on a steady incline. It started the week at $1.335, rising further to $1.330 by Monday, and this morning, it trades at $1.325 in Buenos Aires' informal market. This surge in the blue dollar rate reflects the scarcity of US dollars within the local economy, largely due to stringent currency controls.
Simultaneously, the MEP rate, which emerges from the exchange of local assets for dollars through the stock market, has also seen a rise. The dollar-denominated bond MEP fell eight pesos and closed at $1.324.
The official dollar, on the other hand, has seen a decline. It fell five pesos in the last session, closing at $1.335 for sale and $1.285 for purchase on the official board. However, this rate remains significantly lower compared to the blue dollar and the MEP rates.
The official dollar quote in private banks such as Santander and BBVA is offered at $1.295 for purchase and $1.335 for sale. Other private banks like ICBC and Supervielle offer rates slightly higher, with ICBC offering at $1.295 for purchase and $1.347 for sale, and Supervielle at $1.308 for purchase and $1.348 for sale.
Argentine stocks have not escaped the economic turmoil, with a Black Friday-like sell-off observed last week. Loma Negra registered the biggest loss at 7.9%.
The government's attempts to control the dollar's rise include encouraging credits to exporters, maintaining high-interest rates in pesos, and keeping the dollar below $1.400. Additionally, a ban on monetary emission to finance Treasury expenses is expected to be announced in the coming hours.
The Central Bank has also established a new mechanism to allow exporters to accumulate funds in foreign currency abroad to guarantee certain pre-financing of exports.
Political and economic factors play a crucial role in shaping the dollar rates in Argentina. The dollar rate can experience sharp increases due to speculative demand, monetary policy uncertainty, and political blame placed on banks and economic elites.
[1] Source: Investopedia, "Blue Dollar" and "MEP Rate" [3] Source: Reuters, "Argentina's Blue Dollar Rises as Government Intervention Fails to Stem Dollar Flight" [5] Source: Bloomberg, "Argentina's Blue Dollar Hits Record as Economy Faces Uncertainty"
Congress may consider strategies to address the escalating financial issues, including the surge in the blue dollar and the MEP rate, given the economic turbulence in Argentina. As the Treasury bond auction approaches, finance committees could deliberate on potential measures to stabilize the local currency market and mitigate the outflow of US dollars.
