The exchange rate continues its upward trend, climbing to AR$1,280 per U.S. dollar for the first time. The rise comes amid growing political tension following the Senate’s approval of several bills the government rejects on fiscal grounds and a new setback in the YPF expropriation trial in New York. 

On Monday, New York Judge Loretta Preska rejected Argentina’s request to stay an order to hand over 51% of its shares in state oil and gas company YPF to plaintiffs in the lawsuit over the company’s nationalization. On June 30, Preska ordered Argentina to hand over 51% of its YPF shares as a partial payment to plaintiffs, who won a US$16.1 billion lawsuit over the company’s 2012 nationalization.

According to Gustavo Quintana of PR Operadores de Cambio, the new YPF ruling complicated the trading day as “prices climbed rapidly,” particularly towards closing time, when the exchange rate hit AR$1,280 per U.S. dollar.

The official rate’s rise of AR$18.50 (+1.5%), in order to reach AR$1,280, is a record high. This continues the upward trajectory of the past month: it rose $22.50 (+1.8%) last week, following an accumulated AR$100.50 surge in the previous three weeks. At Banco Nación, meanwhile, the exchange rate rose AR$20, to AR$1,295.

In addition to local conditions, there are also regional factors to take into account. Also on Monday, the Brazilian currency fell 0.4% to 5.58 per dollar following the latest tariff decisions announced by Donald Trump.

“The scenario at the start of the second half of the month does not allow for a clear prediction of price trends, as they are affected not only by internal factors but also by news from abroad that affects domestic interests and anticipates days of volatility,” Quintana analyzed.

The informal blue dollar rate also climbed AR$40 to reach AR$1,340, the highest its been since April 11. Financials also traded higher, as the blue-chip swap rate (CCL, for its Spanish initials) rose almost AR$20, to AR$1,295.52, and the MEP rate rose AR$27, to AR$1,296.

Why is the exchange rate rising?

The official exchange rate continues to rise despite the fact that, by the beginning of July, exporters had sold what could end up being a record amount. Demand for U.S. dollars rose in the domestic market after a report by US bank J.P. Morgan suggested cashing in profits and getting out of “carry trade” bets.

Economists added that other factors are also fueling the rise, such as dollar purchases made by workers using their mid-year bonuses and agricultural exporters who had sold their products before the reinstatement of export duty tax.