Thursday, December 8, 2022

ECONOMY | 15-08-2019 14:56

Argentine peso rebounds after Macri, Fernández call for calm

The peso regained value against the dollar as markets opened on Thursday, following three days of sharp declines.

The peso regained 7.41 percent of its value against the dollar as markets opened on Thursday following three days of sharp declines.

The rebound, which left the peso at 57.89 to the dollar, came after both President Mauricio Macri and opposition presidential hopeful Alberto Fernández, called for calm on Wednesday.

The peso had slipped to near 63 to the dollar at close on Wednesday having closed at 46.55 on Friday.

In between, Macri suffered a resounding defeat in nationwide primaries, signalling a loss of public confidence in his IMF-backed austerity measures with just months to go before October presidential elections. The president polled just 32 percent of the total votes cast compared to Peronist candidate Fernández's 47 percent, leaving the Frente de Todos candidate as the overwhelming favourite in the race.

The results sent the currency and stock markets tumbling on Monday, with the peso losing more than a quarter of its value over three days.

The Buenos Aires Stock Wxchange crashed 38 percent on Monday while on Wall Street shares in Argentine companies plummeted more than 50 percent and Argentine bonds were down 20 percent.

Macri reacted on Wednesday by announcing salary hikes and tax cuts to win back voters while calling for "dialogue" with the opposition to "convey peace of mind in this electoral process." He later tweeted that he and Fernández had spoken and pledged to work together to ensure the economy is affected "as little as possible."

Fernandez, meanwhile, assured markets and voters that his election as president would "not imply the risk of default, it implies a different operating logic."

Argentina defaulted on its debt in 2001 amid the worst economic crisis in its history. 

The country is currently in a recession and posted 22 percent inflation for the first half of the year – one of the highest rates in the world. Poverty affects 32 percent of the population.


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