The key to the elections: FX stability
This year began better than expected for the Argentine economy but the release of Januarys inflation figure in mid-February, which was higher than expected (2.9% m/m, while the market was expecting 2.5%), meant a turning point. From that moment, the exchange rate became more volatile and re-entered in the Non-Intervention Zone, country risk rebounded from […]
Summertime for financial markets
The beginning of the year is being better than expected for the Argentine economy: the exchange rate stands close to the lower bound of the intervention band and volatility remains at low levels, the Central Bank has already bought US$ 978 million and also managed to reduce the LELIQs interest rate by 1,500 bps, while […]
Welcoming an intense 2019
We are starting a year in which the elections will play an important role in the evolution of the economy. If one evaluates Argentina based solely on its economic policies and fundamentals, one would expect that the economy should recover quickly from the recession. However, this is an election year and the choice, as in 2015, […]
Wrapping up a very tough year
It is by now clear that for the macroeconomic front 2018 has been an extremely difficult year. The figures speak by themselves: inflation 47%, growth -1.8%, poverty 33%, country risk 750 points, the policy interest rate 60%, and the exchange rate depreciated over 100% and has been extremely volatile over the year. On the backdrop […]
And the band played on…
The double zero strategy (zero primary deficit and zero growth of the monetary base) appears to be achieving financial stability, as the Peso has strengthened and interest rates have been falling. How hopeful can we be that it will work? It seems that after a year in which the government has been playing trial and […]
An even tighter monetary policy
There was plenty of news during the last month in both the local and the external fronts. On the one hand, the first election round for president that took place in Brazil last Sunday had a surprisingly overwhelming result: Jair Bolsonaro got 46% of the votes, compared to the 29% Fernando Haddad obtained, who was […]
What’s next on monetary policy and exchange rate policies?
There was another round of run on the currency during August, which was caused largely by local events. Although other emerging-markets currencies underperformed and put extra pressure on the exchange rate, the Argentine Peso was the worst: YTD it depreciated more than 100%, followed only by the Turkish Lira (75%). Moreover, the market remains pessimistic […]
Between a rock and a hard place
Argentina has been shocked due to the notebooks affair, which describes in detail the payments of many contractors to the Kirchner administration. The affair has a variety of implications, which go in opposite directions. On the political front, it does provide some relief to the government as it diverts the attention from the economy to […]
Recalculating: new policies, new economic outcomes
In Argentina the dollar is king, as some key indicators such as consumer confidence, the governments positive image and financial stability dance at its tune. There are few countries where consumers, investors and politicians follow so closely the evolution of the exchange rate and where devaluations can topple governments. Besides, in Argentina a depreciation has […]
The IMF is here: what does it imply for the economy
The announcement a month ago that Argentina was resorting to the IMF was not enough to calm the markets. The final announcement that the IMF package would exceed USD 50 billion, an amount that was 11 times the quota and that far exceeded even the most optimistic estimates, did little to appease them. The pressures […]