Informal dollar hits AR$497, Fernndez and Massa blame rumors

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In a difficult session for local finances, the informal dollar jumped 7% on the day, and the exchange gap (brecha) exceeded 120%.

The informal dollar exchange rate, known as the blue dollar, peaked at AR$497 before retreating slightly following statements by Economy Minister Sergio Massa.

The exchange gap is the difference between the official dollar exchange rate and the financial or informal (blue) dollars. The discrepancy is significant because many economic agents use the value of financial dollars as parameters to set their costs and prices.

The race for parallel rates comes as the country faces an acute shortage of dollars: after a drought that cut billions of dollars from Argentina’s export earnings and international reserves, Massa announced a third edition of the special exchange rate for agricultural exporters at the beginning of the month in order to strengthen reserves.

However, amid rumors of an official currency devaluation, exporters slowed their sales considerably despite the preferential exchange rate last week, and did not liquidate any of their earnings on the official foreign exchange market last Wednesday, putting pressure on the rate.

The rise also follows weeks of great political and economic uncertainty, triggered by factors such as President Alberto Fernndez’s announcement that he will not run again, rising debates around the dollarization of Argentina’s economy sparked by libertarian candidate Javier Milei, a 7.7% monthly inflation rate in March and the government fell short of the budget deficit target agreed with the International Monetary Fund (IMF).

During a press conference following a meeting with his Romanian counterpart this morning, President Alberto Fernndez accused the Argentine right of installing rumors that affect the foreign exchange markets, harming Argentine savings.

It’s not news, they always have, said Fernndez, who later wrote a Twitter thread to reflect his statements. We have been through this before and well overcome it again. […] Sergio Massa and I are working together to deal with this scenario.

We are witnessing a permanent practice of Argentine law.

First they install rumors in the morning, then they operate throughout the day and when the afternoon ends, they withdraw their profitability from the foreign exchange market and hurt the savings of Argentines.

— Alberto Fernndez (@alferdez) April 25, 2023

Massa posted an informal dollar rise thread, saying that an atypical situation involving rumours, versions, false reports impacted financial instruments tied to the US dollar.

We will use all the tools of the States to rectify this situation, we notified the IMF of the restrictions which affected Argentina, and which we will modify during the renegotiation of our agreement,

We will maintain our agreements with multilateral bodies, continue to work with exporters by transforming exports into [Chinese] yuan and the IMF disbursement agreement to bolster bank reserves that have been hampered by the impact of the drought, he said.

For several days, we have been experiencing an atypical situation of rumours, versions, false reports and their consequent impact on financial instruments linked to the dollar.

— Sergio Massa (@SergioMassa) April 25, 2023

Story in development – check back for updates

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