Argentina’s peso fell to a four-month low in the illegal street market on speculation the successor to President Cristina Fernandez de Kirchner will retain currency controls.
After about three months of the black-market peso hovering around 12.6 per dollar, it climbed almost 3 percent in the past week as Daniel Scioli, the Buenos Aires provincial governor who is running for president with the ruling party, gained in polls and appointed a running mate loyal to Fernandez. Illegal exchange houses face increased police raids, drying up liquidity and contributing to the plunge, according to Gustavo Quintana, a trader at Rabello & Cia. in Buenos Aires.
“The political climate is making people nervous and driving them to the dollar,” Quintana said by phone from Buenos Aires. “The controls make it worse. They exacerbate the move.”
The black-market peso, known as the blue, plunged 1.5 percent to 13.24 per dollar Tuesday as of 2:22 p.m. New York, the weakest level since Feb. 5. The official peso, subject to daily intervention by the central bank, was little changed at 9.06.
Fernandez has banned most foreign-exchange transactions since her 2011 re-election to curb capital outflows, causing the illegal currency market to flourish.
The gap between the official and black-market rate narrowed since the illegal currency touched a record 15.95 per dollar in September on speculation whoever is elected in October will dismantle currency controls.
Midyear bonuses increased pesos circulating in the market, adding to dollar demand, Quintana said.