A clothing store announces the Argentine peso's informal exchange rate to U.S. dollars, Brazilian Reals and the Euro in Buenos Aires, Argentina, Friday, April 21, 2023. (AP Photo/Natacha Pisarenko)

BUENOS AIRES, Argentina—Antonela Massarelli desperately needed a front door for the new house she and her family will move into in a Buenos Aires suburb.

The 29-year-old mother of two said she found one prospect April 25 at about 20,000 pesos but noted with exasperation that the price went up by afternoon to more than 30,000. And store owners—faced with potentially higher costs to replace doors the next day—mostly wanted to hold onto their merchandise.

“They didn’t want to sell,” she said. “I went to a lot of places and they were closing, they said, ‘I can’t sell to you,’ ‘I can’t sell to you’ and the doors they did want to sell were of a really crappy material.”

Her eventual purchase, at 31,900 Argentinian pesos, amounted to $65 at black-market rates, $144 at the official rate.


Ms. Massarelli’s struggle with the door reflected the uncertainty in Argentina as its currency has sharply depreciated over the past week in the informal market, raising fresh questions about the fragility of the Argentinian economy ahead of October presidential elections.

Recently, the peso in the informal market—known as the “blue” dollar rate—has depreciated around 20 percent, reaching a high of 495 pesos to the U.S. dollar on April 25, increasing the spread with the official rate to around 120 percent. The peso strengthened slightly April 26 although the market remained “very volatile,” according to a currency dealer in Buenos Aires who declined to be identified because his work is technically illegal.

Stringent capital controls mean that access to the official foreign exchange market is extremely limited, so parallel rates have flourished.

“The spread is an indicator of uncertainty,” said Gabriel Caamaño, chief economist at Consultora Ledesma, a local consultancy. “With this level of spread, it’s difficult for the economy to function.”

“The economy is grinding to a halt,” said Walter Stoeppelwerth, chief strategist at Gletir Corredor de Bolsa, a brokerage based in neighboring Uruguay.

“You’re not going to let the inventory go because you don’t know how much it’s going to cost to replace that inventory,” Mr. Stoeppelwerth said, noting that around 45 percent of inputs used for manufacturing are imported.

The country is in a vicious circle. Analysts agree the rapid depreciation of the peso is in part due to the surprisingly high monthly inflation of 7.7 percent in March, which took the annual rate to a whopping 104 percent.

And the rapid depreciation of the currency is in turn driving a further surge in prices, leading analysts predicting April’s inflation number could reach as high as 10 percent.

“We’re at the cusp of a sort of modern-day hyperinflation” that could see annual inflation rate reach 150 percent, Stoeppelwerth said.

For Mr. Caamaño, the currency’s plunge is a reflection of how Argentina’s economy “is held together by a shoestring” with several unsustainable patchwork measures that seem designed with the electoral calendar in mind.

“On top of everything there is a big political crisis in the two most important political spaces,” Mr. Caamaño added, noting there’s infighting in both the ruling administration of President Alberto Fernández and the main opposition coalition.

“In the economic and political realms, there are no stable anchors to hold onto,” Mr. Caamaño said. People therefore seek refuge in dollars.

Although everyone seemingly agrees the official peso is overvalued, the government appears unwilling to pay the political price of an official devaluation so close to an election.

After days of silence, Economy Minister Sergio Massa vowed April 25 that the government would “use all the tools of the state to get this situation under control,” which the president blamed on political opponents.

“At some point, the right-wing should prioritize the interests of Argentina over their own business and political interests,” said President Alberto Fernández, who announced earlier in April he would not be running for reelection.

Mr. Massa said the government will renegotiate aspects of the agreement signed in 2022 with the International Monetary Fund to restructure some $44 billion in debt taken by the center-right government of Mauricio Macri (2015-2019). Mr. Massa also said alleged deliberate destabilization of the currency would be investigated.

Ms. Massarelli was able to buy her door but a sudden jump in the price of materials for a roof—from 140,000 pesos to 220,000 pesos—meant the family could no longer afford bathroom fixtures.

“So, we’re going to move into a house that doesn’t have electricity, doesn’t have gas, doesn’t have water, doesn’t have floors, only cement—with two small children,” she said. (AP)