Argentina Update –Blue Dollar & more –27 April 2023

th of April: 2023

It’s been a rough week for finance, business and living in general as the blue dollar jumped to 497 pesos and the currency exchange gap (the difference between the official and the blue dollar) exceeded 120%. That means the peso is now worth less than half on the parallel market than it is in the official one.

This new increase is a response to the shortage of supply and to a growing demand for hedging. As always, people don’t want to keep pesos in their pockets, and the drought cut billions of dollars from Argentina’s export income and international reserves.

Economy Minister Sergio Massa vowed to use all the tools of the state to stabilize the situation, and President Fernandez blamed the political opposition for extra market volatility.

The truth is this rise also follows a couple of weeks of great political and economic uncertainty, sparked by announcements such as President Fernández confirming he will not seek re-election this year, and the debates around the dollarization of the Argentine economy sparked by libertarian candidate Javier Milei.

Until the situation stabilizes, it’s very likely that those living in Argentina will encounter stark increases in expensive products or brands that outright refuse to sell anything until they understand what their suppliers will charge next.

To make things worse, official sources in the government have told the Buenos Aires Herald that Argentina’s IMF deal has fallen through. The Central Bank intervened in the financial dollar exchange rate by trading bonds this week, which is something that the Fund recommended strict limits on in its last review of the country’s deal. However, sources within the Economy Ministry said that they do not consider that to be the case, but that it is being renegotiated from the ground up including disbursements and all targets such as international reserve accumulation.

Since we started with economic news, the government announced they will be raising the income-tax floor to 500,000 pesos gross (which would be 1,000 dollars at the blue exchange rate or 2,200 at the official exchange rate). Starting the 1st of May, no income tax withholdings will apply when gross remuneration does not exceed 506,000 pesos per month.

The other topic on everyone’s mouths this week was the blanket of smoke and the smell of burning that engulfed Buenos Aires on Monday the 24th. This was caused due to a fire in Uruguay, in the department of San José.

In more positive environmental news, the Spanish newspaper El País published an article about the Argentine company Xinca, which creates footwear with old tires. In Argentina, wheel replacement produces more than 130,000 tons of waste, and producers are not required by the government to recycle the material. That’s why three friends from Mendoza created Xinca under the slogan “our shoes are trash.”

The brand works with a recycling plant that receives trucks that want to discard the tire material, made up of natural rubber, synthetic rubber, metal and other materials. The cheapest model of the “eco shoes” goes for 6,000 pesos (about 12 US dollars).

Speaking of experiments, experts in Argentina are planning to release sterilized male mosquitoes to the world. This was prompted due to the rising cases of dengue, and the plan is to sterilize mosquitoes using radiation that alters their DNA before releasing them into the wild in November. This year, the country recorded over 41,000 cases of dengue, far above the equivalent level in previous years of major outbreaks.

Another thing that Argentina will start doing is giving the Buenos Aires City police stunt guns. According to the city Minister of Safety and Justice, Eugenio Burzaco, the city will import 150 Tasers in the coming weeks, and officers will start using them in June or July once they have been appropriately trained.

The government said these guns will be especially well-suited for situations when officers are under attack but hesitant to use firearms because the assailants are armed only with knives. While the use of stunt guns is widespread across the Americas, human rights groups have raised concerns that their less-than-lethal label opens the door to police officers using them indiscriminately.

Moving on, we mentioned earlier that President Fernandez confirmed he will not be seeking reelection. This announcement was delivered via a seven-minute montage of images and clips accompanied by melancholic music, and came just hours before a meeting of the Peronist national council.

�although he already lost the: 2015

The Economy Minister was hotly tipped last year as an appealing candidate who could win over centrist voters, but the recent economic downturn has damaged his candidacy.

On that note about Vice-President Cristina Fernández de Kirchner, her daughter, Florencia Kirchner, will be suing the La Nación+ journalists Viviana Canosa and Laura Di Marco for violating her human and personal rights with their comments on her alleged “galloping anorexia.” Last week, Di Marco apologized by resigning from the Forum of Argentine Journalists, known as FOPEA, many of whose members had criticized her remarks on the young woman’s health whose disorder she had also attributed to neglect on the part of her mother.

Speaking of slippery situations, Argentina will start exporting oil to Chile again after seventeen years. The loading of crude oil into the Trasandino Pipeline is scheduled to begin in mid-May, and it takes two weeks to set up the system for permanent dispatch. The line starts at YPF’s Puesto Hernández area, located in the Rincón de los Sauces zone, crosses the Los Andes mountain range and reaches ENAP's Talcahuano refinery on the Chilean side.

Other pipelines may be added shortly to reach 70,000 barrels per day.

Since we mentioned Chile, Chilean President Gabriel Boric has unveiled a public-private lithium development policy. The government is seeking a bigger role for the state and to attract more private capital, defend the environment and move further down the value chain.

Chile is one of the biggest suppliers of lithium, but has been losing market share to countries such as Argentina where more investor friendly rules have spurred a boom.

In fact, the Argentine government is currently negotiating a lithium export deal with the United States. Amidst bids to invest in energy transition, the annual lithium demand is expected to reach 2.4 million tonnes, and the US is looking to sign bilateral agreements with the main suppliers.

You know what else will expand this year? Mercado Libre, Argentina and Latin America’s ecommerce giant, which plans to add thousands of jobs this year as it expands its logistics business. Despite other global tech firms cutting jobs, the company will hire 13,000 people, bringing its total headcount to 53,000. The hiring will be focused on roles involved in locations that sort and send packages in Brazil and Mexico, but will also expand its tech and product teams.

It’s worth mentioning that Mercado Libre topped LinkedIn’s list of the best twenty-five firms to work for in Argentina. The ranking also features J.P. Morgan, Chase & Co. and Dow because they are companies that help their employees to prepare themselves to succeed in the future. Also on the list are ExxonMobil, Telecom Argentina, SAP and Fiserv, among others.

re we go, the film Argentina,: 1985

Aaaand that’s it for this week. Remember you can buy our 100% unbleached organic cotton, grown and ginned in Texas, spun and knit in the Carolinas, sewn and printed in Missouri t-shirts. The most environmentally friendly new t-shirt you’ll own. To get one, check the link in the show notes!

¡Nos vemos la próxima semana!