• Free fall: the Argentine peso devalues ​​another 7.5% and the risk premium reaches 10-year highs

The Argentine peso deepened its accelerated devaluation this week between fear of the country's economic implosion in the midst of the coronavirus crisis and doubts about whether Buenos Aires will once again go into default.

The strong restrictions in the exchange market - Argentines are not allowed to buy more than 200 dollars per month - did not prevent the peso from losing much of its value since the Alberto Fernández government decreed mandatory quarantine as of March 20: That day, the Argentine currency was trading at 85 per dollar, and less than two months later, 138 pesos are already needed to buy a ticket for the US currency.

Thus, the dollar in the clandestine market today costs twice as much as in the official market, where it is quoted at 68 pesos, although few are already able to access this legal price. Argentines wonder whether the loss in value of the peso will deepen and fear an inflationary spiral, which is the consequence that devaluations have historically had in the third economy in Latin America.

"In Argentina the dollar is always cheap," Mauro Williams, a specialist in government and public affairs, told EL MUNDO. "It is a matter of expectations, the dollar is the refuge of those who do not want to run out of their savings. You never have to ask yourself whether it is convenient to buy dollars or not, we live in a society that gets rid of its pesos as soon as it receives them" .

The Argentine obsession with the dollar is proportionally inverse to the appreciation they have for their national currency: since the return of democracy in 1983 until today, the peso lost ten zeros in a country that experienced two hyperinflations and today suffers from inflation greater than 50 percent per year. In one week, on the 22nd of this month, the deadline that the Argentine government gave private creditors to exchange their bonds expires . There is fear in the market that Argentina will fall into default again, as it already did in the 2001 crisis.

According to Clarín , the devaluation of the peso is "the correlate of an overflowing issue - which calls for the coronavirus crisis due to the lack of other resources - a dense investor mood that has a default and fears for the post-pandemic recovery, and finally context in which Brazil already devalued its currency 40 percent in 2020 and reached six reais per dollar. "

Brazil is one of the main trading partners of Argentina, but the relationship between both countries goes through low hours, since Fernández and his Brazilian counterpart, Jair Bolsonaro, do not speak.

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