By Walter Bianchi and Eliana Raszewski

BUENOS AIRES Argentina will allow its oil sector to tap a much more favorable exchange rate for the next two months, the economy minister said Tuesday, in a bid to boost the industry amid a severe economic slump and ahead of next month's pivotal presidential election.

Economy Minister Serio Massa made the announcement alongside executives from state-owned oil company YPF, as he seeks to succeed outgoing President Alberto Fernandez as the ruling Peronist coalition's standard-bearer in the Oct. 22 vote.

Argentina tightly controls the official exchange rate as the country's inflation rate stands at more than 124%, but allows a variety of sectors to access preferential rates in a dizzying array of currency controls that critics argue distort economic decisions while prompting millions to flee the local currency, which has seen its value in the black market fall by more than half this year alone.

Massa announced that firms will now be able to exchange 25% of the value of their oil and gas exports using the alternative CCL exchange rate to convert their dollars into pesos.

The CCL rate offers the oil sector about 763 pesos per U.S. dollar, or more than double the value of the official rate, which hovers at around 350 pesos per greenback.

The country's informal parallel market for U.S. dollars currently offers sellers around 758 pesos per dollar.

"We made the decision to recognize 25% of what (energy companies) export and bring to Argentina to invest using the CCL value so that they increase investment levels over the next 60 days in the oil and gas sector," said Massa, at an event in western Neuquen province, home to the country's massive Vaca Muerta shale formation.

Last month, radical libertarian Javier Milei finished first in primary elections, with both Massa and center-right hopeful Patricia Bullrich following close behind.

(Reporting by Walter Bianchi and Eliana Raszewski; Writing by David Alire Garcia; Editing by Muralikumar Anantharaman)