Argentine peso hits record low in black market as economy creaks

Reuters

Published Apr 20, 2023 01:53PM ET

By Walter Bianchi

BUENOS AIRES (Reuters) - Argentina's peso currency sank in widely used parallel markets on Thursday, hitting a record low against the U.S. dollar as concerns grew about the Latin American country's economy, with 104% inflation, reserves dwindling and drought hitting exports.

The black market peso, one of several unofficial rates that have flourished as tight capital controls have limited access to official forex markets, weakened almost 4% to 438 per dollar, roughly double the official rate of 218 pesos.

The blue-chip swap or CCL rate was at 433 pesos per dollar and the MEP was at 421.3 per dollar, traders said.

Argentina, the world's top exporter of processed soy and a major supplier of corn, beef and wheat, is battling to keep its economy stable as a historic drought crimps foreign currency income, fans local prices and drains central bank reserves.

A government effort to spur soy exports with a preferential exchange rate for producers has floundered due to low reserves of the oilseed linked to the drought and worries about the depreciating currency leading farmers to hold onto stock.

That has further pressured already weak central bank reserves, forcing it to sell dollars.

"The scant income of agriculture has forced the central bank (BCRA) to intervene as it had been doing prior to the launch of the 'soybean' dollar," said local consultancy Portfolio Personal Inversiones in a note.