Argentine peso drops on volatile day as IMF visits

A man shows Argentine pesos outside a bank in Buenos Aires’ financial district, Argentina. — Reuters pic
A man shows Argentine pesos outside a bank in Buenos Aires’ financial district, Argentina. — Reuters pic

BUENOS AIRES, Aug 28 ― Argentina's peso depreciated by almost 2.5 per cent against the dollar yesterday, a day after the International Monetary Fund met with presidential election frontrunner Alberto Fernandez.

Meanwhile some leading stocks lost up to 13 per cent of their value in a volatile day in the markets that saw the currency lose value despite the Central Bank buying US$300 million (RM1.26 billion) in pesos in a bid for stability.

The markets had panicked in the immediate aftermath of Fernandez's resounding party primaries election victory two weeks ago, when he polled 47 per cent of the vote and crushed liberal pro-business President Mauricio Macri, who managed only 32 per cent.

The peso sat at 46.55 to the dollar before that vote ― a de facto opinion poll ahead of the October 27 general election ― but closed at 58.66 yesterday.

“What we can expect is pretty negative. The economy is very fragile and has become a lot more fragile since the primaries,” Matias Rajnerman from consultants Ecolatina told AFP.

The peso depreciated by 20 per cent alone in the week after the primaries while the Buenos Aires stock exchange dropped by 30 per cent.

Fernandez and his financial advisers met with the IMF in Buenos Aires on Monday, after which the presidential favorite issued a statement highly critical of the global financial body that last year provided Macri's government with a US$56 billion bail-out loan in return for a strict austerity programme.

“The loan received by the country and the set of conditions associated with it have failed to generate any of the desired results,” his team said in a statement on Monday.

“There has been no letup in the contraction of the economy, a worsening of employment and the situation of businesses and families. There hasn't been a sustained drop in inflation and public debt hasn't ceased to grow.”

Argentina has been in recession since last year, and inflation over the last 12 months has been 55 per cent, one of the highest rates in the world. A third of the population lives in poverty.

The IMF delegation's visit this week is aimed at reviewing the bail-out loan and discussing the next disbursement of US$5.4 billion, due next month. ― AFP

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