Argentina’s Black Market Peso Rate Tops 1,000 Per Dollar

Patrick Gillespie and Ignacio Olivera Doll
·3 min read
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(Bloomberg) -- Argentina’s black market exchange rate hit a record 1,040 pesos per dollar Tuesday, continuing a sharp selloff as Argentines rush to buy greenbacks before the Oct. 22 presidential election.

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The rate, known locally as the “dollar blue,” was near half that level as recently as July, highlighting the panic that’s gripping markets and population at large as inflation surges above 120% while frontrunner Javier Milei advocates replacing the peso with the US dollar as the nation’s currency.

Even a week ago, the illegal rate closed at 800 per dollar, according to data tracked by websites DolarHoy.com and Ambito. Argentine Finance Secretary Eduardo Setti downplayed the peso’s selloff in the black market Tuesday, noting the illegal rate often trails other parallel rates instead of being out in front.

“It’s evident there’s just four guys operating illegally to create fear and uncertainty about people’s savings,” Setti posted on X, the social media platform formerly known as Twitter.

Amid the currency selloff, the government’s tax authority AFIP took the dramatic step of closing the cargo terminal at Argentina’s main international airport for 72 hours to investigate “irregularities.” While official statements made no mention about the peso’s fall, Argentina is running out of dollars to pay for imports, while strict currency controls encourage business to under-report exports.

The slump sent Argentina’s Merval stock index higher as investors sought assets that would track inflation higher. Argentina-listed shares for steel manufacturer Ternium climbed as much as 17%, while Argentine banking stocks including Grupo Galicia, BBVA Argentina and Banco Macro edged higher.

Official inflation data will be published Thursday with economists surveyed by Bloomberg forecasting an annual rate of 135%, which would be the fastest since Argentina exited hyperinflation in the early 1990s.

Read More: Argentina Central Bank Likely to Hold Rate After Inflation Spike

On Monday, Milei openly recommended that Argentines stop saving in pesos, remarks that drew criticism from across the political and financial spectrum for stoking fears. On Tuesday, banks in Argentina fired back at Milei, accusing him of “unnecessarily creating uncertainty and anguish with a lot of people.”

To be sure, other factors are fueling the peso’s plunge. Economy Minister Sergio Massa, who is also the incumbent party’s presidential candidate, is printing money to finance government spending in a bid to win more votes, measures that will likely fuel inflation in the future.

Argentina has a complex assortment of exchange rates between the official rate, frozen by the government at 350 per dollar, and a host of parallel or implied exchange rates. The black market rate is the most famous in the South American country, used largely for all-cash transactions. Another rate, referred to as the blue-chip swap, is legal and traded in local financial markets.

--With assistance from Scott Squires and Philip Sanders.

(Updates with stock moves in the sixth paragraph)

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