Argentina’s peso fell 1.8% on Monday to 45.49 per U.S. dollar due to uncertainty over the country’s presidential election and the fallout from U.S.-China trade tensions, traders said.
Stock markets around the world fell hard on Monday on fears that China’s willingness to let the yuan slide in response to the latest U.S. tariff threat could further aggravate trade-related tensions between the world’s two largest economies.
Argentina will hold a presidential primary election on Sunday with market-friendly incumbent Mauricio Macri expected to come in behind populist-leaning opposition candidate Alberto Fernandez.
The market reaction, economists say, depends largely on the severity of Macri’s likely loss. A very strong showing by Fernandez could increase worries Macri may be unable to overtake him before the October general election.
“It’s the final countdown to the primaries, plus China related complications in external markets. The next few trading sessions will not be for the weak of heart,” Matias Roig, head of Portfolio Personal Investments, told Reuters in an email.
Argentine sovereign bonds were also pressed about 2.1% lower in early trade, reflecting local election and global trade jitters after U.S. President Donald Trump said on Thursday that Beijing had not fulfilled a promise to buy large volumes of U.S. farm products and vowed to impose new tariffs.
After Trump spoke, China’s Commerce Ministry said Chinese companies have stopped buying U.S. agricultural products, and that China will not rule out imposing import tariffs on U.S. farm products that were bought after Aug. 3.
Argentina is highly vulnerable to the current global trade dispute since China is its main trading partner and likewise commodity prices in Chicago sets the tune for the value of Argentine exports.