October 26, 2014
Blue US$ above 12-pesos
For the third consecutive day this week, the black market dollar rose yesterday, this time skyrocketing 35 cents above the psychologically important 12-peso mark, ending up at 12.10 after trading as high as 12.5 pesos during the day.
With rumours of a rift between Central Bank (BCRA) Governor Juan Carlos Fábrega and Economy Minister Axel Kicillof floating around, the former felt compelled to refute them in a release.
Due to certain media publications about alleged differences between the leaders of the Economy Ministry and the Central Bank, which only seek media headlines and financial dealings, the BCRA president, Juan Carlos Fábrega, rejected them in an emphatic fashion and highlights that they have nothing to do with reality,” the Central Bank said in a news release.
Keen on kick-starting an economy that has stagnated during the first four months of the year — if not entered recession — Kicillof is seemingly pressing for interest rates on credit schemes such as fixed-term deposits to be lowered, freeing up more pesos.
Rates were lowered earlier this week, and a trader who works at a financial firm that engages in blue-dollar trading told the Herald that the rate charged for the advance cashing of a check written to 30 days — an industry referred to as “factoring” — had “dropped from a peak of 33 or 34 percent a few weeks ago to 29 percent today.”
Similarly, fixed-term deposit interest rates “have dropped down to 24 to 25 percent” from the peaks of 27 or 28 percent for 90-day schemes seen after the devaluation, Fábrega’s post-devaluation policy to cool down inflation, which in turn cooled down the economy.
ICBC yesterday offered 22.5 percent returns on 365-day deposits for sums up to 10,000 pesos for instance, although sums greater than 50,000 pesos still brought above 27 percent interest.
The return of pocket-burning pesos into circulation in a context of 12-percent quarterly inflation has thus allowed black market traders to take advantage of higher demand for on the informal market.
Speculation of further devaluation after last week’s jump from the 8-peso mark for the official dollar, which closed half a cent lower at 8.075 pesos, has also destabilized the foreign exchange market.
The government thus walks a fine line between giving grain export firms a competitive rate as an incentive to settle and fuelling the black market.
Only those who earn more than 7,500 pesos in formal employment have access to the savings dollar opened to the public in January.
Still coasting on the agri-dollar effect, the BCRA was able to purchase US$30 million yesterday, but exchange rate instability could prove a headache once the harvest ends in July.