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US dollar up in Argentina on fears of Sunday's primaries and the global trade dispute

Tuesday, August 6th 2019 - 09:57 UTC
Full article 2 comments
The market reaction, economists say, depends largely on the severity of Macri’s likely loss The market reaction, economists say, depends largely on the severity of Macri’s likely loss
Argentina is holding primaries on Sunday with market-friendly incumbent Macri expected to come in behind populist opposition candidate Alberto Fernandez. Argentina is holding primaries on Sunday with market-friendly incumbent Macri expected to come in behind populist opposition candidate Alberto Fernandez.

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.

Top Comments

Disclaimer & comment rules
  • imoyaro

    Well, you certainly won't be one... :)

    Aug 07th, 2019 - 04:43 am +2
  • Enrique Massot

    “Argentina is highly vulnerable to the current global trade dispute...”

    Indeed, Macri's “opening Argentina to the world” included eliminating most capital flow regulations, making the country's economy the most vulnerable worldwide to outside events.

    The elimination of regulations has allowed a festival of carry-trade and other speculative practices that have kept a steady flow of capital flight -- and this is why a large part of the funds “generously” facilitated by the IMF have made the trip in the opposite direction shortly after being credited.

    The only sectors of the economy that have received benefits from the Macri government are, to a certain extent, the agri-export and mining, the energy companies, the banks and other financial institutions.

    As for other sectors, they've been losing not only small and medium-size enterprises, but some very large ones.

    In a few more days, we'll be able to say how many smart voters are in Argentina.

    Aug 07th, 2019 - 03:40 am 0
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