Argentina Black Market Peso Tumbles to Record Ahead of Elections

  • Currency weakens to 16.11 per dollar in street markets
  • Argentines seek protection in dollar ahead of elections

Argentina’s peso fell to a record in unofficial street markets as demand for safe-haven assets increased before presidential elections this weekend that are expected to bring changes to the country’s monetary policy.

The currency weakened 1.1 percent to 16.11 per dollar in the black market, where Argentines go to avoid controls that limit their ability to buy pesos at the official rate, according to Ambito.com. That surpassed a previous record low of 16.06 on Sept. 25.

Argentina’s official peso trades in a market that’s tightly controlled by the central bank, which has intervened to limit declines since President Cristina Fernandez de Kirchner’s government devalued the currency in January 2014. Demand for dollars has increased over the past few weeks as Argentines wager that the next government is likely to allow the peso to fall further, according to Ezequiel Aguirre, a strategist at Bank of America Corp.

“As the elections get closer and closer, people see the possibility of a currency adjustment approaching and seek refuge by buying black-market dollars,” Aguirre said from New York.

Front-runner Daniel Scioli has said he would make “gradual” changes to monetary policy if elected. Leading opposition candidate Mauricio Macri has pledged to allow the country’s exchange rate to float freely starting from his first day in office.

The peso weakened 0.1 percent Monday in the official market to 9.4951 per dollar. It has declined 11 percent this year, compared with a 19 percent drop for the Colombian peso and a 32 percent tumble for Brazil’s real.

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