Argentine peso recovers after two days of declining markets internationally

The Argentines took a breather on Friday with the collapse of the free fall of their currency after they had dumped 20 percent in two days and a new round of talks started next week for extra financial help from the IMF.

The Argentine currency increased by 4.98% on Friday and came to 37.98 pesos per dollar. The market reacted Thursday when the central bank raised interest rates, which was 45%, the highest in the world to 60%, and increased the banks' pressure to keep the peso down.

Only on Thursday, the currency depreciated more than 13%, the biggest decrease on this day this year, to close at 39.87 pesos per dollar.

The risk classification office S & P; said on Friday that Argentina had scrutinized the short-term and long-term sovereign debt of Argentina for a possible reduction of its bill.

"We place our & # 39; B + & # 39; sovereign long-term and & # 39; B & # 39; short-term debt for government debt under surveillance with negative implications, & # 39; S & P.;

At the same time, the International Monetary Fund (IMF) has declared itself ready to enter into new negotiations with Buenos Aires on the eve of new financial support in the context of a "revised economic program".

Negotiations with IMF Managing Director Christine Lagarde begin this Tuesday in Washington, according to the bureau.

Next week, new measures are also expected to reduce the budget deficit, while analysts estimate that changes in cabinet integration can provide relief to the government in the context of the currency crisis that began four months ago.

"a crisis of confidence with an economic and political component," said economist Mario Blejer and warned that "it is practically impossible to restore confidence only with economic measures, I have to find political consensus and partners for these consensi."

Former president of the Central Bank in 2002, Blejer argued that the current situation is "much less serious and serious than that of 2001" when Argentina failed to account for the largest external debt of history.

– Argentina vulnerable –

President Mauricio Macri analyzes Friday the political and economic situation with his employees and ministers.

Minister of Finance Nicols Dujovne will travel to Washington on Monday to continue with the IMF in further technical traffic for extra payouts in 2019 & # 39 ;, announced Thursday.

According to analyst Jim Reid of Deutsche Bank: "it is not clear that this is sufficient to stabilize the government's finances, while the central bank's reserve is falling".

Argentina agreed in June on an IMF loan of $ 50 billion to three years, of which he received $ 15 billion. Now it wants the multilateral entity to anticipate the amounts for 2019 and 2020.

The agreement with the IMF expects Argentina to reduce the budget deficit to 1.3% of GDP by 2019.

The government is now investigating whether it is a turning point for a larger adjustment of government expenditure, even with the approach of one election year, or the re-taxation of agricultural exports, the sector that generates more foreign exchange, but which has just suffered the worst drought in 60 years. .

Taxes on the agricultural sector "are not only the right way, it has already been tested and shown to cause a reduction in production," says Continental Daniel Pellegrini, head of the Rural Society, an alliance with the Macri government.

Although the international context does not help the crisis around the South American country, Argentina is much more vulnerable than its neighbors in the region.

In Argentina, "the dollar is the reserve currency par excellence to preserve the value of its savings over the long term," said Vctor Beker, Director of the New Economy Studies Center at the University of Belgrano.

– Depreciation = inflation –

This year the currency depreciated by more than 52%, which benefited, among other things, the increase in tariffs, fuel prices and food prices.

The government has given the forecast of 15% of inflation in the year and acknowledges that it exceeds 30%. The index j increased by 19.6% between January and July. Moreover, it had to change its growth target and the economy is projected to withdraw by 1% by 2018.

Meanwhile, the wage agreements agreed by collective bargaining were mostly below inflation, which means a loss of purchasing power for the employees.

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