The escalation responds to the excess of pesos in the economy, the exchange rate delay compared to inflation and a greater demand for vacations abroad
For iProfessional
01/14/2023 – 11:03 a.m.
The blue dollar begins the second half of January at a new historical record level: $369 for sale in the City of Buenos Aires. The renewed escalation registered by the parallel currency has a direct impact on the loss of value of the argentine peso. Meanwhile, the official dollar, without taxes, trades at almost half that price; $187.50 for sale on the screens of the Banco de la Nación Argentina (BNA).
This marked and constant increase exposes the depreciation of the highest denomination banknote in the national economy. When it was put into circulation on the streets on December 1, 2017, it allowed the purchase of US$56 at the official value.
With the last closing of the exchange market, with a $1,000 bill you can only buy $2.70 at the blue value; while if you seek to do it through official channels, the amount barely amounts to u$s5.33, without counting taxes (30% COUNTRY and 35% perception of Profits).
In January 2020, at the beginning of the government of Alberto Fernández, the blue dollar was trading at $76.50, with which the highest denomination bill bought $13.07. While the official one operated at $62.96, so with a $1,000 bill, $15.88 could be purchased, plus the PAIS tax (30%), the only surcharge that applied to currencies at that time.
Why is the blue dollar rising?
The escalation of the blue dollar is explained by the excess of pesos that the economy has, the exchange rate delay compared to inflation and a greater demand for the expenses required by vacations abroad.
“In summer, demand increases and to this is added the fact that inflation is projected to be close to 5.5% per month during the summer,” said Matías De Luca, an economist at the consultancy LCG.
The blue rises due to a greater demand for vacation expenses abroad
Along these lines, Camilo Tiscornia, director of C&T, indicated that the blue dollar is linked to tourism at this time of the year: “For those who go abroad, it is better to buy the blue dollar than to pay with cards. In contrast, for Anyone who comes to Argentina is better off paying with a card instead of bringing physical dollars and selling them here.”
What should be the new denomination to replace the $1,000 bill?
The economist María Castiglioni, from C&T Asesores Económicos, updates every year what should be the new largest denomination to replace the $1,000. According to his calculation, one of $10,000 would already be needed, since to update the purchasing power that the baker had at the time to the present, $9,372 is needed.
In other words, to buy the same amount of products that the $1,000 person bought in December 2017, today you would need $9,372.
“The highest denomination bill bought almost half of a basic food basket for one person in 2017 -47%-. On the other hand, at the end of 2022 it reached just 4.5%,” said Castiglioni.
“Despite the fact that payments have been greatly modernized, the fact that it only serves to buy 4.5% of the food basket complicates transactions and makes them more expensive, because the transport of each ticket costs the same, regardless of its value” , summarized the economist.
10,000 should be the new denomination that replaces the 1,000 bill
The consultancy GMA Capital added that in the 31 years that the Argentine peso served, 21 years ago it “did nothing but lose value.” He indicated that “the $100 bill managed to be the highest denomination for 24 years. Back in 1992 it bought the equivalent of $24,645 today.”
When graphing the deterioration of the purchasing power of the Argentine currency, GMA Capital indicated that the same bill “around 2016 only acquired the equivalent of $1,273. At that time, when it was decided to launch the $500 bill and later the $1,000 bill. At the time of its issue, the latter bought about $9,379 today.In other words, the bill with the highest current denomination never worth so little. Today, it is 21% below the top floor, back in 2016 when the $100 bill was still the highest denomination.”
