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Argentina will support the Peso with international reserves

Thursday, August 22nd 2019 - 16:26 UTC
Full article 11 comments
“We will not allow an irrational run on the currency. That’s why we have international reserves,” Lacunza told local radio station Mitre “We will not allow an irrational run on the currency. That’s why we have international reserves,” Lacunza told local radio station Mitre

Argentina will not allow a chaotic fall in the peso and will use its dollar reserves to bolster the currency against political uncertainty that has swept the country since the Aug. 11 primary election, Treasury Minister Hernan Lacunza said on Wednesday.

The peso opened 0.47% weaker at 55 to the U.S. dollar and the country’s risk spread was 8 basis points tighter at 1,855 over safe-haven U.S. treasury bonds, reflecting a calming of recent market jitters.

“We will not allow an irrational run on the currency. That’s why we have international reserves,” Lacunza told local radio station Mitre in an early morning interview, less than 24 hours after being sworn in as treasury chief.

Later on Wednesday, Lacunza met with economic advisors to center-left presidential candidate Alberto Fernandez, who crushed business-friendly incumbent Mauricio Macri in the presidential primary vote. The primary result sent the peso spiraling down 18% last week.

“Since the market pays as much attention to the future as it does to the present, in addition to what the government in charge can do, it also matters what the other candidates and their economic teams say, to generate certainty towards the future,” Lacunza said, when asked about the meeting with the Fernandez team scheduled for later in the day.

Fernandez is now the clear front-runner ahead of the Oct. 27 presidential election. Macri has enacted a series of emergency economic measures, including cuts in food and personal income taxes, aimed at helping families stung by Argentina’s recession and 55% inflation rate.

Nicolas Dujovne, the former treasury minister, quit on Saturday, saying he believed the country needed “significant renewal” of its economic team.

The currency stabilized on Tuesday, after the central bank poured US$112 million of its reserves into dollar auctions. }Including last week’s interventions, the bank had auctioned off US$ 615 million in dollar reserves as of Tuesday afternoon, traders said.

Lacunza said Argentina would hit its target of erasing the country’s primary fiscal deficit this year, under a US$57 billion standby financing pact signed in 2018 with the International Monetary Fund. Macri negotiated the pact to halt a run on the peso last year.

Categories: Economy, Politics, Argentina.

Top Comments

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  • Tarquin Fin


    You're definitely not an Ocasio-Cortez fan!! Good. I couldn't agree more with you.
    It would really be a shame if that kind of populism roots itself in the US. Watch out though. Many Venezuelans never saw it coming. Not to mention us rgies ...

    The thing is that if Fernandez and The Lady win, what money will they use to live up to the expectations of their voters?

    I just keep my hopes that Alberto will keep Cristina at bay while implementing the reforms our economy desperately needs. I know this sounds very far fetched but it is the only logical outcome since basically there is no more money in Arg.

    Who knows, Alberto wining could bring about the end of sudaca socialism.

    Hope is free anyways.

    Aug 24th, 2019 - 11:31 pm +3
  • Tarquin Fin

    Ooops! Guess who's talking now? Pro-market liberal “Nielsen” almost in charge of the economic transition. I wonder how long it will take for the clashes with the Ks to start.

    This could start ok but end up in disaster.

    Aug 22nd, 2019 - 06:33 pm +2
  • Jonaz_BsAs

    “ the peso with international reserves”

    Why not defend the peso with unicorns and easter bunnies? See, they're just as real.

    Aug 23rd, 2019 - 03:08 am +2
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