Argentina Fights on Two Fronts to Defend Peso, Draining Reserves
- Argentina is now intervening in parallel and official markets
- Policy is draining reserves and denting investor confidence
A currency exchange house in Buenos Aires. The peso has risen about 9% against the dollar since the government moved into the parallel market.
Photographer: Sarah Pabst/BloombergThis article is for subscribers only.
Argentina’s decision to extend its defense of the peso to the parallel market is draining its foreign currency reserves and denting the most fragile of commodities in its battered economy: investor confidence.
On July 13, the government announced for the first time that it would intervene in the so-called blue chip swap rate to prop up the peso, expanding its efforts from the official market where it allows the peso to weaken just 2% a month against the dollar. Since then, the peso has risen roughly 9% against the greenback in the parallel market.