Australian foreign exchange: black market exchange rate is twice as cheap as the official exchange rate!

Bank of America strategists said,The worst is yet to come for the Argentine peso, which has become the world's weakest currency this yearIt hovered around 350 pesos to the dollar on Tuesday.

The bank's strategists predict that the winner of Argentina's presidential primary election could further devalue the peso starting in December.

"So the official rate will fall to 545 pesos by the end of this year and then to 1,193 pesos by the end of 2024."

In Sunday's presidential primaries, Javier Millay, the candidate regarded as an "outsider" and "Argentina Trump", won a surprise victory.He wants to dollarize Argentina's economy and abolish the central bank.The result prompted President Alberto Fernandez to devalue the peso's official exchange rate by 18 percent on Monday to 350 pesos per dollar.It was the biggest one-day devaluation in years.As a result, the prices of local goods rose even more.

In order to calm the market, Argentina's central bank raised interest rates for the fifth time this year on August 14.Interest rates increased by 2,100 basis points from 97% to 118%.Previously, Argentina's central bank raised interest rates once in March, twice in April, and once in May.

Strategists believe that under the influence of increasing political uncertainty, inflationary pressures ahead of the October election, the drag of drought on exports, and negative currency reserves,Argentina "foreign exchange marketThere will still be pressure... We expect further depreciation in the future. "

According to dolarhoy.com website, the currency devaluation has left Argentines unable to access dollars on the official market.They can only compete to buy dollars on the parallel market (black market) on the streets of Buenos Aires, pushing the exchange rate above 700.

Bank of America strategists said the current devaluation was "generally positive" given that the Argentine peso had been significantly overvalued, and said it was favourable that the current administration was shouldering some of the burden of necessary macroeconomic adjustments. They wrote:

"This should be good for the international monetary fund agreement, which is pending approval by the IMF board to pay $7.50 billion in loans."

However,Currency depreciation will put further pressure on inflation.Consumer prices in Argentina rose 113.4 percent year-on-year, lower than expected, according to government data released Tuesday.But it is still close to its highest level since 1991.Prices rose 6.3 percent month-on-month, reversing two months of cooling inflation but falling short of economists' expectations of 7.1 percent.

Economists at JPMorgan expect inflation to reach an annual rate of 190 per cent by the end of 2023. Ms Brooks, an IMF official, sees inflation reaching 120 per cent by the end of the year. The Central Bank's survey of market expectations, published in July, projects inflation of 142.4 per cent in 2023.

AohuiForeign exchange investment pointed out that Argentina's already struggling government bonds led the decline in emerging market bonds under the influence of the plunge in the peso.Bank of America maintained its recommendation to increase its debt holdings as strategists were optimistic about the outlook for economic policy.