In this illustrated photo taken on October 17, 2022, a 100 Argentine Peso bill is placed on top of several 100 USD bills. Reuters/Agustin Marcarian/Illustration/File Photo Obtaining license rights
BUENOS AIRES, Oct 19 (Reuters) – Argentina’s government intervened on Thursday in foreign exchange markets to reduce volatility ahead of Sunday’s general election, but officials said there was no sharp devaluation of the currency after the vote.
Traders said there had been little activity on the black market, where the dollar was selling for nearly three times the official rate, during the government crackdown, with bids ranging from 900 to 1,010 pesos per dollar, but no confirmed transactions. It is said that there was not.
“There is a huge range in prices due to concerns about the government blocking illegal transactions and the closure of many exchanges,” said a foreign exchange trader, speaking on condition of anonymity.
“The market is virtually inactive,” said another operator. “It’s all very complex and there’s a lot of uncertainty in the management, and that’s reflected in the prices.”
Argentina’s strict capital controls since 2019 have forced many people into illegal black markets and other informal parallel markets to buy dollars, pushing the peso down to 350 pesos to the dollar since August. This has become a headache for the entrenched government.
The Oct. 22 election features two leading candidates pledging to lift capital controls, and many analysts and traders are predicting a sharp decline after a one-day drop of nearly 20% in August. Anticipating currency devaluation.
However, the government moved to ignore these claims.
“The official dollar on October 23rd will (still) be 350 pesos,” Secretary of Economic Policy Gabriel Rubinstein wrote of He added that it would not be possible.
He added that from November 15, a “crawl peg” will be applied that will allow the currency to devalue by 3% per month.
Argentines are looking to save money ahead of the election, given the uncertain outlook for the country. The leading liberal, Javier Millay, will face Economy Minister Sergio Massa and conservative Patricia Bullrich.
Milley, a radical outsider, promised to dollarize the economy and eventually shut down the central bank.
Traders said Thursday the government was trying to support the struggling currency.
“There is a ‘friendly’ hand providing liquidity” to rein in the foreign exchange market, said one private lender.
Report by Jorge Otaora and Hernan Nessi.Editing: Richard Chan
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