The election of Donald Trump as the President of the United States has generated a wave of economic uncertainty around the world, and Argentina is no exception.
With the likely prospect of a low-tax, high-spend policy under Trump, the value of the US dollar is on the rise. And with that rise, the Argentine peso has experienced a relative decrease in value. Yesterday the value of the dollar rose 32 centavos to AR $15.80, according to agencies and banks in the city of Buenos Aires. Yesterday’s surge was the highest increase in the dollar’s value against the peso since mid-June, after Brexit. Since Thursday, the value of the dollar has seen an overall increase of 60 centavos, which sees the dollar at its highest value since March, after 8 months of gradual descent.
The current volatility of the market has also seen a marked increase in the dollar’s value in the wholesale market, where the dollar also rose 32 centavos yesterday to 15.72. Amid such economic uncertainty, investors are opting for a “flight to quality”, purchasing high-quality, low-risk investments, resulting in a sustained demand for dollars.
And with the sudden surge, yesterday also saw increased activity in hedging transactions. With the dollar rising, buyers flooded in before a slight retreat when orders to sell came in when the rate reached a tempting AR $15.70 per 1 USD. However, by the end of the day buyers had returned and the rate recovered value. The overall volume exchanged yesterday totaled at 307 million dollars, a 210% increase.
“What’s happening in Argentina is the same phenomenon that we’re seeing around the world. There is reason to believe that Trump will opt for a nationalist policy and that will strengthen the dollar,” said local currency expert Aldo Miceli, speaking to La Voz. Indeed the shock-waves from Trump’s triumph have had an even greater effect in Mexico and Brazil, where the the Mexican peso (10.9%) and the Real (7.1%) have experienced a far greater decline than the Argentine peso (3.1%) relative to the US dollar.