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2d ago

Argentina’s Peso Market Fractures into Record Parallel Dollar Rates

Lifting currency controls has pushed the government to rely on cheaper peso bond sales as the central bank’s reserves drop to their lowest level since mid-June.

Dólar cambio
Interior del Palacio de la Bolsa de Madrid.
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Overview

  • Multiple official and informal exchange rates are trading at record premiums, with the blue dollar touching ARS 1,295 after a ARS 70 rise over four sessions.
  • The Ministry of Economy placed ARS 8.5 trillion in peso debt at a 38.99% annual rate, down from 50.53% in the prior auction, to shore up funding.
  • Gross foreign-exchange reserves fell by US$376 million to US$38.79 billion, their lowest since June 12 following payments on global bonds.
  • Dollar-futures now price a 6.4% depreciation in July and project a year-end rate of ARS 1,447, well above the government’s ARS 1,229 forecast.
  • Financial markets were roiled by a leaked off-the-record remark from Economy Minister Luis Caputo—known as the “efecto Fantino”—while the S&P Merval fell 2.9% and ADRs dropped up to 5.7%.