dollar | Dollar Blue | Argentine Dollar | Miley | Javier Miele | Elections in Argentina: How will the value of the dollar change after the election? | Economy

Today the National elections in Argentina, the country elects its president and members of Congress for the 2023-2027 term. Its price dollar in this country It was not immune to the situation and saw an increase in its value throughout the campaign, mainly on the parallel market.

As a result, it was closed last Friday The dollar is blue It is trading at 900 pesos, up 12.5% ​​from its value on October 2, 2023. This is not the highest the dollar has seen in the midst of the election climate, with the dollar costing 1,100 pesos between October 10 and 11. .

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Meanwhile, the official dollar 368.03 Argentine pesos were quoted on Friday for each US currency. Traded between 366 and 368 pesos throughout October.

It should be remembered that in Argentina There are two types of exchange: official dollarIts price is established by the central bank, and The dollar is blue, from the parallel and illegal market, it cannot be bought from banks or authorized exchange houses. The value of the latter is much higher than that official dollar. Today the gap between the two stands at 144.5%.

“The official dollar does not reflect actual market conditions. People, investors, think that the Argentine currency should be somewhat weak in the current environment and do not believe that the central bank’s decisions can confirm that.” explains Hugo Berea, Chief Economist at PPVA Research.

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In this way, the market chooses the parallel marketing of the US currency The dollar is blue, to a value consistent with investors’ zero confidence in the Argentine peso. The price of the blue dollar is highly volatile due to speculation.

“For decades Argentina It faces a serious problem of lack of credibility in its currency. [La sobre emisión de pesos] This created a systemic problem of inflation, the permanent tendency of Argentines to take refuge in the dollar, and the uncertainties that really make any kind of forecasting or planning at all levels very difficult. The value of the dollar is a very sensitive indicator of Argentina’s stability and morale, and is enhanced in an electoral situation like the current one.Sofia Concedo, Master in Economics from ESEADE and COO of Bricksave, explains.

Elections and tensions

According to the latest polls, there will be a second round to determine the new president Argentina. Libertarian Javier Miley, the candidate of La Libertad Avanza, is leading in the intention to vote, but will not reach the 45% needed to win in the first round. Your competitor will be defined in between Sergio MassaPeronist and current Minister of Economy, and right-wing Patricia Bullrich.

Dichotomous between mercy And his extreme proposals, such as closing the central bank, dollarizing the Argentine economy or closing ministries, and the continuation of Massa, create volatility in the price of the dollar.

“He The dollar is blue He is expected to win mercy, but he will not have a majority in Congress and it will depend on whether his proposals are approved. That is why it needs alliances with the more traditional right wing. That’s why the price of the dollar moves every day, because it usually reacts to political game moves and alliances that can be formed.” says Elmer Cuban, partner at Macroconsult.

For Berea, Monday will begin with a new rise in the value of the US currency. As he pointed out, the country’s macroeconomic problems, such as the peso’s devaluation, a lack of reserves at its central bank, or inflation — which hit 140% annually in September — but election uncertainty could fuel it. More and more.

“Markets expect that the upcoming measures may be complex to implement and may create a period of uncertainty. That’s why investors prefer to seek a safe-haven currency like the dollar to protect themselves. There are doubts about the election results, but the remaining options suggest that measures to ultimately stabilize the economy will be difficult. And if you don’t succeed mercy And the ruling party wins, it will be a continuation of policies“, he noted.

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The election’s effects on the dollar were seen in the primaries, which determined the candidates for the final runoff. He won them mercy with 30% votes. A day after these elections, on Monday, August 14, the official dollar It was quoted at 366.18 pesos, up 22% compared to the price of 300.01 on Friday, August 11. Meanwhile, the The dollar is blue It rose 13% to 685 paisa on August 14.

A similar situation may occur on Monday, but subsequent volatility will depend on the political game.

“If it happens mercy Combined with the right to a second round and right-wing forces with Peronism, it would be an alliance that could be harmful to peace. [precio del] dollar. If it happens mercy There is an apparent alliance between, and against, Peronism mercy And macrismo, I think the dollar will fall. But it depends on the coalition” says Cuba.

For Concedo, regardless of the winner, the trend will continue to be positive.

“Beyond the election results that will determine who will be the next president, there is great uncertainty about the country’s economic future. Argentina, and the lack of borders makes the market lean towards a strong and stable currency, the dollar. What we’ve been seeing for months is an upward trend, and I don’t think that’s going to change now”, he predicts.