Parallel Dollars and Rising Country Risk: The Implications of Phase Two of Argentina’s Economic Plan

The start of phase two of the government’s economic plan was met with distrust by the market, leading to increases in alternative dollars and a rise in country risk. After a press conference held by Minister Luis Caputo and the president of the Central Bank Santiago Bausili, the parallel dollars surpassed 1,400 pesos and reached the highest nominal prices recorded so far.

On the first business day following the press conference, the blue parallel dollar climbed 40 pesos to end at $1,405. Financial dollars also saw an increase, with the cash with liquidity reaching $1,412.5 and the MEP at $1,413. Financial rates rose by 4.6% on the first day of the second semester, more than double the expected increase in the official rate for the month.

Despite these increases, investors are moving towards dollar-denominated investments due to growing uncertainty in the market. There is a shift away from peso-denominated assets as investors seek safe havens for their investments during periods of market volatility. The lack of a defined implementation period for