BUENOS AIRES, Argentina (AP) 鈥 Antonela Massarelli desperately needed a front door for the new house she and her family will move into this weekend in a Buenos Aires suburb.
The 29-year-old mother of two said she found one prospect Tuesday morning at about 20,000 pesos, but noted with exasperation that the price went up by afternoon to more than 30,000. And store owners 鈥 faced with potentially higher costs to replace doors the next day 鈥 mostly wanted to hold onto their merchandise.
鈥淭hey didn鈥檛 want to sell,鈥 she said. 鈥淚 went to a lot of places and they were closing, they said, 鈥業 can鈥檛 sell to you鈥, 鈥業 can鈥檛 sell to you鈥 and the doors they did want to sell were of a really crappy material.鈥
Her eventual purchase, at 31,900 Argentinian pesos, amounted to US$65 at black-market rates, US$144 at the official rate.
Massarelli鈥檚 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.
Since early last week, the peso in the informal market 鈥 known as the 鈥渂lue鈥 dollar rate 鈥 has depreciated around 20%, reaching a high of 495 pesos to the U.S. dollar Tuesday, increasing the spread with the official rate to around 120%. The peso strengthened slightly Wednesday although the market remained 鈥渧ery volatile,鈥 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.
鈥淭he spread is an indicator of uncertainty,鈥 said Gabriel Caama帽o, chief economist at Consultora Ledesma, a local consultancy. 鈥淲ith this level of spread, it鈥檚 difficult for the economy to function.鈥
Massarelli lived this first-hand Tuesday as she sought supplies for her house in the Lomas de Zamora suburb. As the peso depreciated, many stores simply closed. She managed to get into one store right as it was closing.
鈥淭hey wanted to sell me a simple metal door for 80,000 pesos, and the owners were telling me that they couldn鈥檛 sell me anything for less because they didn鈥檛 know how much it was going to cost tomorrow,鈥 Massarelli said.
Finally, Massarelli went back to a seller who had offered her a door for 19,900 pesos in the morning. 鈥淲hen I said yes, at 2 in the afternoon, he told me it had increased to 31,900,鈥 Massarelli said. 鈥淚 didn鈥檛 have a choice, it鈥檚 not that I have money to spare but I need a door and tomorrow it鈥檚 going to be more expensive and the day after it would be even more expensive.鈥
Massarelli must move by Saturday and has nowhere else to go with her husband, 7-year-old son and 2-year-old daughter, so she reluctantly paid up.
鈥淭he economy is grinding to a halt,鈥 said Walter Stoeppelwerth, chief strategist at Gletir Corredor de Bolsa, a brokerage based in neighboring Uruguay.
鈥淵ou鈥檙e not going to let the inventory go because you don鈥檛 know how much it鈥檚 going to cost to replace that inventory,鈥 Stoeppelwerth said, noting that around 45% 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% in March, which took the annual rate to a whopping 104%.
And the rapid depreciation of the currency is in turn driving a further surge in prices, leading analysts predicting April鈥檚 inflation number could reach as high as 10%.
鈥淲e鈥檙e at the cusp of a sort of modern day hyperinflation鈥 that could see annual inflation rate reach 150 percent, Stoeppelwerth said.
For Caama帽o, the currency's plunge is a reflection of how Argentina鈥檚 economy 鈥渋s held together by a shoestring鈥 with several unsustainable patchwork measures that seem designed with the electoral calendar in mind.
鈥淥n top of everything there is a big political crisis in the two most important political spaces,鈥 Caama帽o added, noting there鈥檚 infighting in both the ruling administration of President Alberto Fern谩ndez and the main opposition coalition.
鈥淚n the economic and political realms, there are no stable anchors to hold onto,鈥 Caama帽o 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 Tuesday that the government would 鈥渦se all the tools of the state to get this situation under control,鈥 which the president blamed on political opponents.
鈥淎t some point, the right wing should prioritize the interests of Argentina over their own business and political interests,鈥 said Fern谩ndez, who announced earlier this month he would not be running for reelection.
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). Massa also said alleged deliberate destabilization of the currency would be investigated.
Massarelli was able to buy her door but a sudden jump in the price of materials for a roof 鈥 from 140,000 pesos to 220,000 pesos 鈥 meant the family could no longer afford bathroom fixtures.
鈥淪o, we鈥檙e going to move into a house that doesn鈥檛 have electricity, doesn鈥檛 have gas, doesn鈥檛 have water, doesn鈥檛 have floors, only cement 鈥 with two small children," she said.
