Argentina's Black-Market Peso Continues to Weaken

First Published Friday, 25th January 2013 10:44 pm - © 2013 Dow Jones


By Taos Turner

BUENOS AIRES--Argentina's black-market peso continued its ongoing slide Friday, weakening to ARS7.61 to the U.S. dollar, according to the financial daily El Cronista.

Argentina strictly limits the sale of dollars and other currencies, sending people and companies that want them to the underground market.

Rising demand for the dollar, spurred largely by tourists who need dollars to travel abroad, has pushed the gap between the official-exchange rate, which is closely controlled by the central bank, and the black-market rate to a new high. That gap has raised fears that businesses will start raising prices in anticipation that their costs might rise.

The official exchange rate weakened at a faster-than-normal pace Friday, closing at ARS4.9655 to the dollar on the MAE wholesale-currency market, compared with ARS4.9575 in the previous session.

The black-market dollar, or "blue dollar" as it is locally known, can influence the price of goods and services, including imports and real estate.

It is impossible to determine the exact volume of the underground market, but analysts estimate the daily black-market trade running at between $25 million and $40 million.

A top Argentine official was quoted earlier this week saying it would be reasonable to think the official-exchange rate will slide to around ARS6 to the dollar by year-end.

Some economists, meanwhile, say the blue rate is on track to slip to around ARS9, or even ARS10, by the end of 2013.

The benchmark Merval stock index rose 0.7% to 3,339.77 on total volume of about ARS61 million ($12.3 million).

Power distributor Edenor (EDN.BA) led the gains, rising almost 6% to ARS1.02. It was followed by Telecom Argentina SA (TECO2.BA, TEO), the most traded stock, rose 2.3% to ARS22.20.

Steel producer Tenaris SA (TEN.MI, TS) was also heavily traded. It rose about 1% to ARS74.60.

The bank Banco Macro S.A. (BMA.BA, BMA) led the declines, sliding 3.3% to ARS13.

Securities tied to economic growth, otherwise known as GDP warrants, were mixed.

The TVPE fell 0.28% to ARS53.15, while the TVPY rose 0.76% to ARS46.20.

Write to Taos Turner at taos.turner@dowjones.com

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