The informal dollar exchange rate, popularly known as the “blue dollar,” surpassed the AR$500 mark for the first time in history today.

The exchange rate, which started the week at AR$492, closed on Wednesday at AR$503 per dollar. Other parallel exchange rates MEP dollar and blue-chip swap rate reached AR$488.65 and AR$501.46 respectively. The official exchange rate is AR$276.89.

“It’s to be expected that parallel exchange rates, among them the blue dollar, would go up over time, following the general increase in the nominal values of the Argentine economy,” Santiago Manoukian, the research lead of the Ecolatina consulting firm, told the Herald. “It would be weird if they stood still.”

For weeks, Argentine social media users have been posting memes of the yaguareté — the large cat native to the Americas portrayed on the AR$500 bills — fighting against representations of the US currency, implying that the tender was “resisting” against being worth less than one dollar.

Today, depictions of the death of the yaguareté and passing the torch to the hornero — Argentina’s national bird portrayed in AR$1,000 bank notes— trended on social media.

Manoukian thinks that in Argentina’s “flimsy macroeconomy,” the fact that exchange rates rise continually is better than the alternative — having them fixed at the same value for a long time to then jump by, for example, 20% in 15 days. He also said that analysts should pay attention to the gap between the official and the parallel exchange rates rather than just to blue dollar’s nominal value.

Today, the gap between the blue and the official dollar is just over 90%, at 90.49%.

“The government is complying with its goal of keeping the gap relatively stable and anesthetized below 100%,” Manoukian said, contending that the blue dollar is not at a “crisis value.” 

“In real terms, it’s well below what we had in July 2020, after [former Economy Minister] Martín Guzmán resigned which, in today’s prices, would be AR$580,” he said.

What to expect

Argentina is going through a major international reserve scarcity crisis, which deepened during this year’s historic drought. As the country is renegotiating its program with the International Monetary Fund and further incorporating the yuan into its battered economy, international reserves are at a record-low negative US$6.5 billion, according to Ecolatina.

The blue dollar is often used by Argentines to circumvent currency controls that the government imposed to avoid the flight of international reserves, limiting citizens from buying more than US$200 per month through official channels.

“The government will do everything possible to reduce exchange rate pressures, but they will still be there,” Manoukian said. “There is no margin for a new agro dollar [preferential exchange rate for agricultural exporters] to have the same performance it had in September. At that point last year, there were about 24 million tons of soybeans to sell, now there are less than 10 million.”

Manoukian also said that, in the second half of the year, the Central Bank tends to sell more reserves than it gets in the first part. With the upcoming elections, he also said it’s likely that investors will increasingly dollarize their portfolios.

“The primaries and the general elections will be very important milestones to determine which kind of tension there will be in the exchange market,” he said.