Argentina’s biggest labor union on Tuesday called for a 24-hour national strike to protest the government’s austerity policies, heaping pressure on President Mauricio Macri as he battles against a biting recession and jittery markets.
Argentina’s peso fell back on Friday afternoon to post a record low close, giving up earlier gains after a tumultuous week that saw the currency battered to its weakest ever level and local debt pummeled as anxious investors fled.
Argentine assets have tumbled so far, so fast that a few stout-hearted investors say it might be time to buy. “Find me a high-yield sovereign country with an IMF program paying so generously,” said Jean-Dominique Butikofer, the Atlanta-based head of emerging-market fixed income at Voya Investment Management, which oversees about US$ 205 billion.
Argentina lived on Thursday another day in which the dollar rebounded and the country risk exceeded 1000 points. President Mauricio Macri criticized the short-term view of the markets and the Central Bank (BCRA) had to intervene by positioning the interest rate at 70% and diverting the futures market to contain the demand on the currency, preventing it from reaching the maximum accorded of 51.45 pesos.
Argentina ran a primary fiscal deficit of 13.037 billion pesos (US$ 305.32 million) in March, the country’s Treasury minister Nicolás Dujovne said at a press conference on Monday, though posted a first-quarter surplus of 10.347 billion pesos.
The Argentine Peso slid to all-time lows against the dollar as concerns about inflation, weak growth and October's presidential election weighed. The currency has lost 14% so far this year and the weakness raises fears of a repeat of the currency crisis of 2018 when the Peso lost half its value against the dollar.
Investors in Argentina are starting to get the jitters. The gap in yield between local and U.S.-issued bonds has roughly doubled in the last month in the face of stubborn inflation and mounting peso outflows, heaping pressure on President Mauricio Macri ahead of elections later in the year.
Industrial activity in Argentina dropped 4.1% in August compared to a year ago, completing a 0.8% contraction so far this year, according to a survey by the country's Industrial Union, UIA. However compared to last July industrial production was up 0.7%.
S&P said on Friday it may lower Argentina's long-term foreign currency rating from its current B+ grade, which is four notches below investment grade -- and on par with Turkey, Greece and Fiji. The ratings company cited the risk of worsening creditworthiness and exchange rate volatility as potential threats to the economic adjustment measures undertaken by Mauricio Macri’s administration.