Ar­gentina cur­rency cri­sis is over, says Macri

Jamaica Gleaner - - FINANCIAL GLEANER -

PRES­I­DENT MAURI­CIO Macri said Wed­nes­day that Ar­gentina’s cur­rency cri­sis is over, speak­ing as the coun­try’s cur­rency re­bounded some­what and prices for its stocks and bonds rose.

Macri an­nounced last week that Ar­gentina was seek­ing a fi­nanc­ing deal with the In­ter­na­tional Mon­e­tary Fund, IMF, fol­low­ing a sharp drop in the peso. The de­ci­sion brought back haunt­ing memories for Ar­gen­tines who blame the IMF for in­tro­duc­ing poli­cies that led to the coun­try’s 2001 eco­nomic im­plo­sion.

Ar­gentina was forced to im­pose in­ter­est rate hikes and to tighten the fis­cal deficit target to try to halt the de­val­u­a­tion of its cur­rency, which has lost about 25 per cent of its value in re­cent weeks.

The peso hit a new all-time low of 25.30 to the US dol­lar Mon­day. But it rose at 24.8 per dol­lar Wed­nes­day, and Ar­gen­tine stocks and bonds rose.

Macri said his govern­ment thinks it has “over­come” the tur­bu­lence over the cur­rency. He also said he will de­mand “an in­tel­li­gent” deal with the IMF.

“It’s im­por­tant to recog­nise the mo­ment of ner­vous­ness and an­guish lived by a sec­tor of the pop­u­la­tion,” Macri told reporters at the pres­i­den­tial palace.

“There was fear and an­guish. To­day, we have a dif­fer­ent cli­mate, but we must take a bal­ance of what hap­pened.”

The eco­nomic tur­bu­lence high­lighted the frailty of Ar­gentina’s econ­omy de­spite aus­ter­ity mea­sures im­posed by Macri, a con­ser­va­tive who has vowed to boost growth and curb Ar­gentina’s high in­fla­tion.

Macri’s govern­ment has re­quested a “high-ac­cess standby ar­range­ment” from the IMF to meet its debt obli­ga­tions with­out risk­ing a dis­rup­tion of eco­nomic growth.

“With this deal, we will po­ten­tialise the fu­ture of Ar­gen­tines,” Macri said.

The cri­sis 17 years ago re­sulted in one of ev­ery five Ar­gen­tines be­ing unemployed and mil­lions slid­ing into poverty. The peso, which had been tied to the dol­lar, lost nearly 70 per cent of its value.

Many Ar­gen­tines have blamed the IMF since then for its role in Ar­gentina’s record debt de­fault of more than US$100 bil­lion.

A sur­vey by Ar­gen­tine poll­sters D’Alessio Irol/Beren­sztein said 75 per cent of Ar­gen­tines feel that seek­ing as­sis­tance from the IMF is a bad move. The sur­vey of 1,077 peo­ple in early May had a mar­gin of er­ror of three per­cent­age points.

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