Argentina’s exchange market burns: the dollar reached a historical record and climbed to $375 this Monday

The exchange parity registered the highest nominal values in history in the parallel market. The bullfight that began in November of last year deepens more and more.

Despite the measures launched by Economy Minister Sergio Massa, exchange rate peace was irretrievably lost since November and the dollar continues to break all-time records because the peso has no floor.

The exchange parity climbed to $375 on Monday, the most extreme nominal value since the launch of the current monetary sign.

The price closed the day at $370, so it accumulated a jump of $4.

The dollar accumulated a jump of 80 pesos since November 7 of last year, the moment in which the currency run that is currently taking place in the country was unleashed.

The months of November and December are typically associated with merely temporary increases in the demand for pesos (due to the holidays and the collection of the Christmas bonus) but starting in January this effect is reversed, and threatens to deepen the pressure on the dollar until March.

The exchange gap increased again and has risen to 95.3% compared to the official dollar price.

The increase in the gap threatens to boycott the program launched by Massa, since it generates a series of distortions that directly affect real activity and prices.

The growing differential between the official exchange rate and the parallel exchange rate produces favorable incentives for the underdeclaration of exports and the overinvoicing of imports, on all transactions that must go through the Central Bank and the official exchange rate.

The imbalance in the currency balance and the outflow of BCRA reserves forces the Government to impose greater restrictions on imports (through non-automatic licensed and legal quotas), thus generating a cocktail that translates into a slowdown in activity.

Real activity measured through the INDEC EMAE index has been completely stagnant since September 2022, industrial activity has not grown since August and construction has been in decline since July. All these recessive signals respond to the currency squeeze.

Likewise, and unlike what happened in the last two months of last year, starting in January the drop in demand for pesos also has a strong impact on prices.

With information from La Derecha Diario

More: Argentina news in English, every day from The Rio Times.