Argentine markets hold steady as anti-Macri protesters decry austerity, rising poverty

Argentine markets hold steady as anti-Macri protesters decry austerity, rising poverty

Reuters  | Sep 04, 2019 20:56

Argentine markets hold steady as anti-Macri protesters decry austerity, rising poverty

By Adam Jourdan and Jorge Otaola

BUENOS AIRES (Reuters) - Argentine markets held steady on Wednesday, even as thousands of protesters took to the streets to demonstrate against the government of President Mauricio Macri and a darkening economic outlook in the recession-hit South American country.

The peso held its ground and bonds rose after newly imposed capital controls helped stabilize haywire markets that have plumbed record lows since Macri was trounced in a primary vote last month, dashing his hopes of re-election in October.

On the streets of Buenos Aires, protesters brandished banners slamming Macri's economic austerity policies, rising poverty, and the International Monetary Fund (IMF), which agreed to a $57 billion credit facility with the country last year.

"Salary increases now! The debt is with the people, not with the IMF," one banner with large red letters read. Others demanded proper wages and lower inflation, while some placards read "Macri and the IMF out."

Many Argentines have been bitterly resentful of the IMF since a massive economic crisis and devaluation in 2001 that they blame in part on the Fund's policies toward the country.

Argentine economic growth has stalled sharply since last year, while inflation is far outstripping salaries, leading to a sharp uptick in poverty, official data shows. That trend was one of the key reasons for Macri's larger-than-expected electoral defeat to left-leaning Peronist Alberto Fernandez.

"Given the fragility of our economy, we must now address the most urgent issues," Macri said at a business leaders event on Wednesday, adding that measures the government had taken were "only justified in an emergency".

"We must focus on trying to anticipate and contain as much as possible the potential negative impact that it's clearly having on the lives of all Argentines."

The government's focus was on stabilizing the exchange rate, protecting middle class savings and looking to build "consensus" with other political forces in the country, he added.

The peso closed flat at 56.02 per U.S. dollar with traders saying the central bank had sold dollars to bolster the currency. That came after the peso rose sharply on Tuesday as Wall Street cheered Macri's capital controls aimed at protecting the beleaguered markets.

The black market peso, traded in unofficial channels, also rose. Argentine over-the-counter bonds were up an average 4.7% on Wednesday, traders said, while the country's risk index fell. The Merval stock index (MERV) climbed more than 8%.

"(Argentina) took a very good step over the weekend when they announced the capital controls," said Carlos Abadi, managing director at financial advisory firm DecisionBoundaries in New York. He added, however, that the government also needed to address issues of tumbling bond prices that have raised the country's borrowing costs.

The primary election result sparked a market crash which saw the peso lose 26% of its value against the dollar in August. The country risk index soared and bond prices sank to record lows.

In response, Macri, who came to power in 2015 as a free-market champion and critic of interventionist policy, has rolled out plans to push back payments on around $100 billion of debt and imposed capital controls to protect the peso.

While markets have stabilized, the country's economic outlook has darkened. A central bank poll of economists hiked its inflation forecast for the year to 55% on Tuesday, and cut its outlook for the economy, which it now expected to shrink 2.5%.

Economists also sharply lowered the 2020 growth forecast from an expansion of 2% to a 1.1% contraction, suggesting a far deeper-than-expected recession ahead.

Related News

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Discussion
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 中文 香港 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
NoYes
CancelYes
Saving Changes

+