Argentina’s peso slumped to a record low in the parallel market, deepening its slide since last month’s default and prompting government officials to say holdout creditors are behind a speculative attack.
The peso in the so-called blue-chip swap market, used by investors who buy peso securities and sell their dollar equivalents abroad to skirt currency controls, plunged 2.2 percent to 12.9541 per dollar at 4:04 p.m. Buenos Aires time and extending its decline since the default to 22 percent. The currency in the black market weakened 1.3 percent to a record low 14.38 per dollar.
Argentina defaulted last month for the second time in 13 years after the country was blocked from making debt payments because President Cristina Fernandez de Kirchner refused to comply with a U.S. judge’s order to also pay about $1.5 billion to a group of holdout creditors from an earlier default in 2001. Creditors including Elliott Management Corp., which is demanding payment in court, refused to accept losses of about 70 percent in debt restructurings following the earlier default and have spurned subsequent offers on similar terms.
The holdouts “are acting through financial groups to generate negative expectations with speculative attacks against the currency,” Cabinet Chief Jorge Capitanich said today. “They’re generating an artificial crisis where there is none.”
Stephen Spruiell, a spokesman for New York-based Elliott, didn’t respond to a telephone message from Bloomberg News seeking comment.
The government said Aug. 19 it’s planning to skirt the ruling by paying international bonds through local banks.
Over the past week, the currency has weakened 0.9 percent in the official market, the most among 24 emerging-market currencies tracked by Bloomberg after the Chilean peso. It was little changed at 8.4014 per dollar today.
“The vulture funds’ plan is to attack the currency,” Economy Minister Axel Kicillof said in a separate appearance later today, referring to the holdouts, a group of hedge funds. “They threatened with a huge devaluation of the currency if they don’t get paid.”
A failure to resolve the default will push Argentines to hoard dollars to protect themselves from further depreciation in the peso or a devaluation, according to a report published yesterday from Daniel Kerner, the head of Latin America research at the Eurasia Group.
“In the absence of a settlement, it seems likely that pressures on the currency will continue to intensify,” Kerner wrote.