Macri enlists further financial and political support, but Peso continued to slide

Saturday, May 12th 2018 - 07:50 UTC

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Argentina’s central bank sold US$1.1 billion in the foreign exchange market on Friday and the peso weakened 2.74% to an all-time closing low of 23.35 per U.S. dollar despite talks aimed at securing an International Monetary Fund financing deal. Read full article

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Enrique Massot
As it should be expected, the announcement of a potential IMF credit to Argentina failed to reassured wary investors who continued to ditch their peso-denominated bonds feeding demand for US dollars.

Who would, after all, trust the Macri government to accomplish much with a stand-by loan (or even a 'high-access' stand-by loan) when previous borrowing in the last two and a half years has produced little - if anything at all?

The run on the dollar apparently took the Macri administration by surprise, hence disjointed announcements ranging from “we won't be borrowing abroad” to “we'll lower the fiscal deficit by cancelling public works” to finally “we'll go back to the IMF.”

Apparently Macri got alarmed his plans to squeeze Argentines in 2018 but give them a break in time for the 2019 election may be thwarted if foreign money stopped coming in.

Now, Macri's popularity is taking a toll. Not many in Argentina trust the IMF to do anything positive for the economy, as memories are still fresh about the results of past interventions.

Part of the opposition, which supported government bills in Congress for two and a half years, are now distancing themselves and have united behind a proposal to put a break on utilities' increases.

Meanwhile, a good part of the economy is paralysed while business owners attempt to sort out rapidly changing parameters such as the value of the peso, while the 40 per cent interest reference rate makes impossible taking any credit for small and medium-size enterprises.

As many say, a 'perfect storm' in the making.
May 13th, 2018 - 04:44 am - Link - Report abuse -1
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