Argentina’s Peso Plummets as Black Market Rate Surpasses 1000 Per Dollar

Argentina’s black market exchange rate, commonly known as the “dollar blue,” reached an all-time low of 1,040 pesos per dollar on Tuesday.

This steep depreciation reflects the anxiety pervading both financial markets and the general population as inflation soars past 120% while the leading presidential candidate, Javier Milei, advocates adopting the US dollar as Argentina’s official currency.

Merely a week ago, the illicit exchange rate stood at 800 pesos per dollar, underscoring the rapid deterioration.

Argentine Finance Secretary Eduardo Setti downplayed the black market’s fluctuation, attributing it to a handful of individuals creating fear and uncertainty among savers.

Amidst the currency crisis, Argentina’s tax authority, AFIP, took the unprecedented step of closing the cargo terminal at the country’s primary international airport for 72 hours to probe alleged “irregularities.”

This move comes as Argentina grapples with a dwindling supply of dollars for imports, and strict currency controls incentivize businesses to underreport exports.

Investors flocked to assets that could hedge against inflation, causing Argentina’s Merval stock index to surge. Shares of steel manufacturer Ternium rose by up to 17%, while Argentine banking stocks like Grupo Galicia, BBVA Argentina, and Banco Macro also experienced gains.

Economists anticipate an annual inflation rate of 135%, the highest since the early 1990s, when official inflation data is released on Thursday.

The situation intensified as Milei publicly advised Argentines to stop saving in pesos, drawing criticism for sowing fear.

This currency crisis is compounded by government measures, including printing money to finance expenditures, further exacerbating inflation.

Argentina’s complex exchange rate system, spanning official, parallel, and implied rates, adds to the nation’s financial challenges, making the “dollar blue” a key indicator of black market economic instability.