The Argentine peso was trading mostly lower due to the dollarization of investments before crucial elections such as Sunday’s primaries, where the presidential candidates who will compete in the October general elections will be chosen.
“The currency’s depreciation remains steady despite the government’s efforts, as the trend further complicates triple-digit inflation, the fiscal deficit, and the bleeding of central bank reserves,” traders said.
“The government is wasting dollars; it is intervening in the futures market, and the tenders are aimed at state agencies that have more and more participation. You can’t devalue without a plan behind it,” said Sebastián Azumendi, of Adcap Grupo Financiero.
Presidential hopefuls from Latin America’s third-largest economy face a conundrum over devaluation, analysts told Reuters, after the government cancelled some $3.4 billion of debt to the IMF through complex financial engineering.
The interbank peso was devalued by 0.37%, to 284.15/284.25 per dollar, with the constant intervention of the BCRA, an entity that accounts for negative net reserves of around 9,500 million dollars, according to analysts.
The monetary authority just validated on Monday a 1.36% drop in the official parity, making the correction at the beginning of the week the highest since August 2019, except for those that followed weeks limited by holidays.
The downward trend was corroborated in the futures slates, where by the end of December, contracts were trading at 551 pesos per dollar and climbing to 830 units by July 2024.
