Argentina new economy chief will not allow 'irrational' run on peso

By Hugh Bronstein and Hernan Nessi BUENOS AIRES (Reuters) - Argentina will not allow a chaotic fall in the peso and will use its dollar reserves to bolster the currency against political uncertainty that has swept the country since the Aug. 11 primary election, new Treasury Minister Hernan Lacunza said on Wednesday. The peso was 0.55% weaker at 55 to the U.S.

Reuters August 22, 2019 00:11:05 IST
Argentina new economy chief will not allow 'irrational' run on peso

Argentina new economy chief will not allow irrational run on peso

By Hugh Bronstein and Hernan Nessi

BUENOS AIRES (Reuters) - Argentina will not allow a chaotic fall in the peso and will use its dollar reserves to bolster the currency against political uncertainty that has swept the country since the Aug. 11 primary election, new Treasury Minister Hernan Lacunza said on Wednesday.

The peso was 0.55% weaker at 55 to the U.S. dollar in afternoon trade while local stock and bond prices rose slightly, suggesting that recent market jitters had begun to calm.

Argentina's currency, stock market and bonds went into a tailspin last week after the primary vote indicated the leftist opposition should easily win October's presidential election, raising fears of a return to interventionist economic policies.

"We will not allow an irrational run on the currency. That's why we have international reserves," Lacunza told local radio station Mitre in an early morning interview, less than 24 hours after being sworn in as treasury chief.

The central bank sold $26 million in reserves on Wednesday afternoon at an average 54.983 pesos per dollar after offering a total $50 million. Buyers shied away from diving into the full offer, preferring to wait for a more favorable exchange rate, traders said.

The currency stabilized on Tuesday, after the central bank poured $112 million of its reserves into dollar auctions.

Including this and last week's interventions, the bank had auctioned off $641 million in dollar reserves, traders said.

Later on Wednesday, Lacunza is scheduled to meet with economic advisers to center-left presidential candidate Alberto Fernandez, who crushed business-friendly incumbent President Mauricio Macri in the primary vote.

"Since the market pays as much attention to the future as it does to the present, in addition to what the government in charge can do, it also matters what the other candidates and their economic teams say," Lacunza said, when asked about the meeting with the Fernandez team.

Fernandez is now the clear front-runner ahead of the Oct. 27 presidential election. In a bid to shore up support, Macri has enacted a series of emergency economic measures, including cuts in food and personal income taxes that are aimed at helping families stung by Argentina's recession and 55% inflation rate.

Nicolas Dujovne, the former treasury minister, quit on Saturday, saying he believed the country needed "significant renewal" of its economic team.

Lacunza said Argentina would hit its target of erasing the country's primary fiscal deficit this year, under a $57 billion standby financing pact signed in 2018 with the International Monetary Fund. Macri negotiated the pact to halt a run on the peso last year.

(Reporting by Hugh Bronstein and Hernan Nessi, additional reporting by Jorge Otaola and Walter Bianchi; Editing by Nick Zieminski and Rosalba O'Brien)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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