Is the Argentine economy poised for a crash? Is it ever not? Here’s the latest:
Axel Kicillof, the country’s Economy Minister, responded to the rate on an Argentine radio program. He blamed a group of hedge fund holdout creditors suing the country for over $1.3 billion of sovereign debt.
He said the rate was all part of their plan to speculate the country into ruin, and dismissed the size of the underground market.
“This attack on our money was all a part of the vultures’ plan,” said Kicillof. “The United States representative spoke of default, and that wasn’t casual… The dolar blue is a small market that is illegal… It’s easy for it move quickly… There are no economic reasons for the dollar to equal 15 pesos [15 dolar blue]. This is simply an attempt to generate panic. Do not be alarmed…”
Argentina was ruled in default of its debt in July after it defied a U.S. court order and refused to pay a group of hedge fund creditors.
That, however, is only a small part of Argentina’s problems. The “economic reasons” for the underground peso’s historic jump that Kicillof dismissed are very, very real. And the dolar blue market rate is no tiny market in the country. Regular Argentines use it every day, underground blue dolar exchanges aren’t hard to find, and it’s estimated that $10 million U.S. dollars are exchanged on the black market daily.
Argentina’s politicians and crony capitalists will only get out of the way of economic growth until there’s enough to steal.
Crash, recover, loot, repeat.