Argentine peso slips in parallel black market to all-time low

RIO DE JANEIRO, BRAZIL – Argentina’s peso surpassed the psychological barrier of 300 pesos per U.S. dollar in the black market on Tuesday, hitting a record low as it traded down 3% compared with the previous day as both businesses and individuals hold on to scarce greenbacks.

The beleaguered currency in the informal market ARSB  has lost nearly an accumulated 31% through the year, in line with 32% inflation during the same period, according to private estimates.

Savers are turning to the black market due to tight currency controls on the official exchange rate amid uncertainty over a potential devaluation, a move the government has pledged to avoid. Meanwhile, inflation could reach 80% this year as internal tensions rack the governing coalition of President Alberto Fernandez.

The official peso exchange rate weakened 0.19% against the dollar on Tuesday, widening the gap with the parallel rate to slightly above 132%.

“The growing gap shows a greater tension in the foreign exchange market, and generates more pressure for a devaluation of the official exchange rate,” the National University of Avellaneda (UNDAV) said in a statement.

Reuters

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