‘Blue dollar’ breaches AR$600 mark

The government raided informal dollar exchange houses known as ‘cuevas’

Argentine banknotes of 1000 pesos and american one hundred dollar bill

The informal US dollar exchange rate, popularly known as the “blue dollar,” breached the AR$600 mark for the first time on Wednesday just days before Sunday’s presidential primaries.

The exchange rate had been on an upward streak for at least a month — on July 12, it was valued at AR$500.

The MEP dollar increased by AR$6 (+1.2%) to AR$530 while the blue-chip swap rate fell by AR$5.6 (0.9%) to AR$592. The official wholesale exchange rate rose AR$0.95 to AR$285, with the Central Bank’s accelerating the crawling peg.

On Tuesday, Economy Minister Sergio Massa said that the increase in the informal exchange rate was related to speculative maneuvers.

“Today [Tuesday] it seemed that [the informal dollar] was going down all day long but at the last minute the same mischief-makers that yesterday and the day before were playing around,” said Massa, who is also one of Unión por la Patria (UxP)’s presidential candidates in the upcoming primaries. He was speaking at a press conference after a campaign event in Malvinas Argentinas, in Buenos Aires.

“Tomorrow we are going to make them feel the strength of all the tools at the disposal of the Financial Information Unit (UIF, by its Spanish initials). Tomorrow, when the UIF carries out its operations, if there is any result, we will report it.”

The Economy Ministry did not immediately respond to the Herald’s request for comment. However, sources close to the matter did confirm that the UIF raided “cuevas” — Spanish for caves, informal dollar exchangers — around Buenos Aires City on Wednesday afternoon. 

The surge in the “blue dollar” comes in the context of the expected pre-electoral dollarization of investors’ portfolios, increased restrictions on US dollar bonds imposed by the National Securities Commission, soaring inflation and record-low international reserves.

Protracted negotiations with the International Monetary Fund — which said would disburse US$7.5 billion only after the primaries — also had an influence on the surge.

On Wednesday, the Central Bank sold US$94 million in the official foreign exchange market. The “agricultural dollar” preferential exchange rate for certain agricultural exports contributed some US$46 million — the lowest amount since its launch.

Users on social media made fun of the round number, naming the exchange rate “Fiat 600 dollar”, accompanied by pictures of cars of that model.

“The blue dollar does not influence the tomato value chain, but I understand that there is a situation that is generated around this,” Massa said on Tuesday. “As long as the financial dollars and the official dollar have a framework of stability, the speculative processes that occur around that market tend to settle.”

— With information from Télam


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