By Jorge Otaola
BUENOS AIRES (Reuters) – Argentina’s black market peso weakened 3.91% against the dollar in the informal parallel market on Wednesday, hitting a record low of 1,280 per greenback as a rally earlier this year faltered on rising political tensions and slow grains exports.
The gap between the official exchange rate and the popular parallel market used to get around strict capital controls widened to some 44%. That gap had narrowed from near 200% to under 18% after libertarian President Javier Milei took office in December and sharply devalued the official FX rate.
Traders played down a run on the currency, but Argentina’s peso has been facing a downward trend in recent days due to political tensions, slow farm sales and the central bank’s move to cut interest rates to 40% from 50% last week.
The government of libertarian President Javier Milei is also facing delays to its reforms plans and hopes for a pact with regional governors, key to being able to get things done with only a minority in Congress and limited regional presence.
“You have pressure in Congress, the farmers are bringing in less (currency) than expected and there is no incentive with rates to invest in funds,” said a financial trader at private local bank Macro, who asked not to be named.
“Those are sufficient factors to understand the reason why the dollar is gaining (against the peso).”
(Reporting by Jorge Otaola; Editing by Gabriel Araujo)