Tracking Foreign Exchange Rate Pressure in Argentina
Released the first week of the month, the Report monitors graphically the behaviour of selected economic variables that have been powerful predictors of tensions in Argentina’s foreign exchange rate market. For decades, the country has exhibited recurrent shortages of foreign exchange currency, which end-up manifesting themselves in balance of payments deficits. These deficits translate initially into loss of international reserves, leading sometimes to large adjustment in exchange rates. Currency tensions are usually accompanied by portfolio dollarization and capital flight that aggravate the balance of payment crisis, generating runs against the local currency that culminate in financial crises and destabilize the national economy. Against this background, the Report analyses selected variables that help to characterise tensions in the foreign exchange market in Argentina.
The main variables selected for monitoring are the following: bank deposits in domestic and foreign currency, exchange rates of the Argentinean peso (official exchange rate, blue and blue-chip swap), foreign currency settlement, commodity prices, capital outflows and net international reserves. For each variable, we present a chart summarising its recent evolution together with a short commentary and analysis. Being up-to-date on evolving developments and emerging tensions in Argentina’s foreign exchange rate market is important to make decisions on M&As, foreign trade and flows of dividends and profits between your local operations and the overseas headquarters. If you have operations in Argentina or are planning to do business with the country, this report will help you to make better-informed decisions now.
