Dollar breaches 1,000-peso mark ahead of pivotal Argentina election

The US dollar has broken through the symbolic 1,000 peso mark on Argentina's parallel market, as citizens scrambled to dump the currency two weeks before a pivotal presidential election.

Argentines are heading into the vote with annual inflation at over 120 percent and record poverty levels, as economic malaise in the South American giant reaches a new crescendo.

The dollar has long been a safe haven from the peso, with people buying the currency whenever they can as a form of savings and protection from foreign exchange volatility.

However, with strict restrictions on access to dollars, the "blue dollar" - a thriving black market exchange tool - is how most get their hands on the greenback. With the parallel dollar now trading at over 1,000 pesos, it is worth almost three times the official rate of 365 pesos, propped up at great cost by the government.

Uncertainty is high ahead of the vote, and frontrunner Javier Milei, an outsider who has vowed to dollarise the economy, on Monday urged people to steer away from investments in pesos.

"Never in pesos, never in pesos. The peso... isn't worth excrement," Milei told a local radio station just days after saying that a higher dollar rate would make it easier to dollarise the economy.

The "blue dollar" has flourished in recent years as the government has restricted citizens from buying $200 a month due to diminishing foreign reserves. While theoretically illegal, the rate is shown all day on national television.

After Milei's comments kickstarted a run on the peso, the Central Bank issued a statement on Monday saying the "Argentine financial system presents a solid situation of solvency, capitalisation, liquidity, and provisioning."

Buenos Aires Stock Exchange records over 10% increase

The Buenos Aires Stock Exchange closed more than 10 percent higher Tuesday as investors sought out dollar-linked assets, according to analysts. Weary Argentines, young and old, rich and poor, have flocked behind Milei as their only hope out of the country's seemingly endless economic quagmire.

Buenos Aires-based economist Andres Borenstein, with the Econviews think-tank, said veterans of the country's economic crises knew not to go into an election "with a lot of pesos in your pocket."

The libertarian has vowed to take a chainsaw to the bloated state and "dynamite" the central bank. Economists say his plans to dollarise the economy are not feasible, notably because the country is so short on foreign currency.

'Irresponsible'

Milei's main rivals in the October 22 vote will be former security minister Patricia Bullrich on the right, and incumbent Economy Minister Sergio Massa from the ruling center-left coalition.

Massa has slammed Milei's comments as "irresponsible." Massa has also been accused of worsening Argentina's crisis by going on a spending spree to woo voters.

Argentines remain haunted by the country's economic implosion in 2001, and deeply distrustful of their own banks and currency. That year, amid a growing economic crisis, authorities froze bank deposits to avert a flight of capital and a run on the dollar.

Protests and looting broke out, the president fled by helicopter, and within days the country defaulted on $100 billion in debt. Almost 40 people died in a crackdown on protests. While the country's banking system is on surer footing, the peso remains heavily overvalued, with an official devaluation seen as likely after the election.