Political talks lift Argentina markets after grim three-day rout

By Walter Bianchi and Gabriel Stargardter BUENOS AIRES (Reuters) - Argentine markets on Thursday bucked a dismal three-day losing streak on signs that political leaders from both parties were determined to control an economic crisis sparked by a shock election result that wiped out around 25% of the peso's value. The peso began to fall on Monday after presidential candidate Alberto Fernandez, running alongside former leftist President Cristina Fernandez de Kirchner, unexpectedly trounced center-right President Mauricio Macri, whose austerity measures turned off voters in Sunday's primary vote. There had been few signs of rapprochement between Macri and Fernandez in the immediate aftermath of the vote, but as markets continued to tumble on Wednesday, they spoke on the phone, agreeing to try to calm volatility.

Reuters August 16, 2019 02:05:25 IST
Political talks lift Argentina markets after grim three-day rout

Political talks lift Argentina markets after grim threeday rout

By Walter Bianchi and Gabriel Stargardter

BUENOS AIRES (Reuters) - Argentine markets on Thursday bucked a dismal three-day losing streak on signs that political leaders from both parties were determined to control an economic crisis sparked by a shock election result that wiped out around 25% of the peso's value.

The peso began to fall on Monday after presidential candidate Alberto Fernandez, running alongside former leftist President Cristina Fernandez de Kirchner, unexpectedly trounced center-right President Mauricio Macri, whose austerity measures turned off voters in Sunday's primary vote.

There had been few signs of rapprochement between Macri and Fernandez in the immediate aftermath of the vote, but as markets continued to tumble on Wednesday, they spoke on the phone, agreeing to try to calm volatility. Fernandez later said his economic plans did not contemplate a debt default. [nL2N25A0A2]

The peso ended the day around 5% higher at 57.4 pesos per dollar, according to traders, who said the chance to snap up rock-bottom pesos had also contributed to the jump. Argentina's Merval stock index <.MERV> was up more than 3% on Thursday afternoon.

"The conversation was cordial and didn't lead to any concrete announcements, but at least for the first time it showed a desire for both sides to cooperate," broker SBS said in a note. "These gestures will probably serve to calm the spirits of investors but we'll have to see if they are enough or if more specific measures are needed."

Argentina, Latin America's No. 3 economy, is no stranger to financial crises. But its latest lurch comes amid widespread volatility and fears of a global recession sparked by the trade war between China and the United States, and ongoing protests in Hong Kong.

The primary election had prompted fears of a return to protectionist policies and the end of free-market economic reforms should Fernandez triumph in October's election, as now seems likely. Brazil's economy minister, Paulo Guedes, said on Thursday that his country would pull out of the Mercosur trade bloc if Fernandez becomes president and closes Argentina's economy.

Thursday was the first day this week that the central bank did not undertake dollar auctions from its own reserves to prop up the peso. Since Sunday's vote, the central bank has auctioned a total of $503 million.

The government still has breathing space for more dollar auctions if the peso begins to fall again. The central bank has about $66 billion in reserves, of which about $20 billion are free resources that can be used to pay debt and stabilize the peso, according to an Argentine government official.

Speaking earlier on Thursday in a radio interview, Fernandez said he was comfortable with an exchange rate of 60 pesos to the dollar.

Graphic: Graphic on the peso and country risk index, click https://fingfx.thomsonreuters.com/gfx/editorcharts/MERCADOS-ARGENTINA-CIERRE/0H001QEQK7XN/eikon.png

Macri has announced a series of welfare subsidies and tax cuts for lower-income workers since Sunday's vote, in an awkward about-turn for a president who took office in 2015 vowing to slash public subsidies and to correct what he called years of leftist economic mismanagement.

Macri promised to raise the minimum wage, temporarily freeze gasoline prices and increase the income tax bracket floor by 20%. On Thursday, he announced plans to help people with inflation-linked mortgages.

(Reporting by Walter Bianchi and Gabriel Stargardter; Additional reporting by Eliana Raszewski, Cassandra Garrison and Rodrigo Campo; Writing by Gabriel Stargardter; Editing by Rosalba O'Brien and Leslie Adler)

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

Updated Date:

TAGS:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Gilead nears deal to buy Immunomedics for more than $20 billion, WSJ reports
Business

Gilead nears deal to buy Immunomedics for more than $20 billion, WSJ reports

(Reuters) - Gilead Sciences Inc is nearing a deal to buy biopharmaceutical company Immunomedics Inc for more than $20 billion, the Wall Street Journal reported on Saturday, citing people familiar with the matter. A deal for Immunomedics, which last month reported positive data from a late-stage study for its breast-cancer drug, could be announced Monday if not sooner, the Journal said https://www.wsj.com/articles/gilead-nears-deal-to-buy-immunomedics-for-more-than-20-billion-11599936777?mod=hp_lead_pos2. Gilead and Immunomedics did not respond immediately to emailed requests from Reuters for comment

China bans German pork imports after African swine fever case
Business

China bans German pork imports after African swine fever case

SHANGHAI (Reuters) - China banned pork imports from Germany on Saturday after it confirmed its first case of African swine fever last week, in a move set to hit German producers and push up global prices as China's meat supplies tighten. China's ban on imports from its third largest supplier comes as the world's top meat buyer deals with an unprecedented pork shortage after its own epidemic of the deadly hog disease. The ban on Germany, which has supplied about 14% of China's pork imports so far this year, will push up demand for meat from other major suppliers like the United States and Spain, boosting global prices.

Libya's Haftar committed to ending oil blockade, U.S. says
Business

Libya's Haftar committed to ending oil blockade, U.S. says

CAIRO (Reuters) - Libyan commander Khalifa Haftar has committed to ending a months-long blockade of oil facilities, the U.S.