The Argentine economy is awaiting the primary elections, the so-called STEP, on Sunday with open hearts. On Tuesday, when the candidates for the October 22 presidential election are already known, the National Statistics Institute will release the inflation rate registered in July, a number that will remain an anecdote as the country braces for the expected post-election shocks to the markets . The government of Peronist Alberto Fernández has prepared for a Black Monday, whatever the outcome. According to the local press, she imported dollars in cash to ensure banks’ currency liquidity, fearing people would withdraw their savings en masse if the outcome didn’t meet their expectations.
The last few days have been characterized by the greatest exchange rate tensions in an economy that is in intensive therapy. To stem the collapse of the peso and stem the constant flight of the dollar, Economy Minister and candidate for Peronism, Sergio Massa, has erected all kinds of firewalls: new taxes on imports, hikes in the dozen exchange rates introduced by the central bank, extraordinary loans to Qatar and the CAF – Inter-American Development Bank to process payments with the International Monetary Fund. The series of measures did not prevent a surge in the dollar price in the informal market, which has risen from 596 pesos to 605 pesos in a week. The gap between the so-called blue dollar and the official one (which only importers have). access to the drop counter) is 110.5%.
It is common for Argentina to hold elections in a state of fluctuating exchange rates. The day after the August 2019 primary election, it was clear that Kirchnerism, little appreciated by the markets, would return to power in October, it was full-blown Black Monday. Subsequently, the peso depreciated 25% against the dollar and Argentina’s stock market fell 37% after hitting a low of 60%. With the final elections — like those due this Monday — two months away, the prospect of a government without authority awaiting final defeat ultimately weighed on the foreign exchange liberalization that Mauricio Macri launched under the guise of Mauricio Macri had advanced a $44,000 million loan from the International Monetary Fund. While Fernández, as President-elect, made sure his government made good payments on that debt, Macri ended his tenure by imposing an exchange control that is still in effect today.
The secret for this Monday is revealed. Minister and candidate Sergio Massa protested against “the speculators” at the end of the election campaign, while the peso lost 6.6% of its value. “Those who speculate and play with the insecurity of the merchant or the retiree are leading the speculation in a small and informal market where the state is unable to intervene,” he said in an interview on Thursday, referring to it on the blue dollar.
The strength that the government can show depends on the central bank’s international reserves, which maintain the dollar’s official price below the minimum level. This Friday, when politicians were legally bound into the pre-election silence, La Nación newspaper reported three armored trucks loaded with dollars exiting Ezeiza International Airport after a plane from the United States landed. Some time later, they entered the central bank parking lot in downtown Buenos Aires. According to internal documents cited by this newspaper, the company planned to deposit more than $300 million in cash to protect the system from a potential rush of deposit withdrawals.
A leap in the parallel transformation that governs daily life in Argentina is only part of the problem. By the end of the month, the government expects an IMF disbursement of $7,500 million, contingent on the country meeting its target of reducing the budget deficit by 1.9% by the end of the year (the best estimates are around $2 .4%). ) and that its international net reserves will reach $1,000 million by the end of 2023, a substantial reduction from the $8,000 million it had called for in March. These will be the terms until the next review of their deal, scheduled for November, when Argentina has already elected a new president. An eternity for a country that lives from day to day.
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