Pablo Soria de Lachica Examines the Impact of Argentina’s Presidential Elections on its National Currency
MEXICO CITY, MEXICO / ACCESSWIRE / November 19, 2019 / On October 27, Argentina elected Alberto Fernández as its new president by nearly 2,000,000 votes over the incumbent Mauricio Macri, immediately setting off a number of adverse reactions from within the country's volatile financial sector. Although the value and outlook of the Argentine peso remains unsteady as a result, Pablo Soria de Lachica notes that a number of different factors remain at play, many of which were already in effect prior to the final ballots being cast. The prominent forex broker discusses the current aspects surrounding Argentina's economic issues, soon to be in the hands of a new presidential administration with a differing philosophy from its predecessor.
The first substantial financial impacts sustained from the country's elections occurred in early August, when primary results showed presidential challenger Alberto Fernández winning more than 47% of the vote, virtually guaranteeing a win against incumbent Mauricio Macri in the looming October election. This sent Argentina's currency and stocks into a freefall the following day, as investors feared that Fernández's populist views could replace the current business-friendly government of Macri's. Benjamin Gedan, director of the Argentina Project at the Wilson Center described the short term reaction from the markets as to CNN as "absolutely brutal", while describing the country's history of alternating back and forth between governments with drastically different approaches to business as its main issue. "There's absolutely no consistency in its approach to the private sector and to private investment," he told CNN International's Paula Newton.
Prior to the primary elections, the Argentine economy was already experiencing a recession, with an unemployment rate of 9.5% and inflation at 55.8%, according to the World Bank. While president, Macri implemented several austerity measures such as raising taxes and cutting fuel subsidies, but these were needed in order to cut government costs after he was forced to seek a $50 billion bailout package from the International Monetary Fund (IMF) in 2018. Later, in response to the market's reaction to the primary election results, Macri issued an order for the nation's Central Bank to authorize dollar purchases in order to stop the outflow of money leaving the country and stabilize foreign currency reserves, which were declining as Argentina tried to provide support for the peso. These government controls over capital were a full reversal for Macri, who had ended a similar policy after taking office in 2015. Just over a month later, on the day after Fernández's presidential election victory, the Central Bank drastically reduced the monthly limit on the amount of dollars that can be purchased from $10,000 to $200 via bank accounts, or $100 via cash transactions.
Fernández and his running mate, former president Cristina Fernandez de Kirchner, are set to take office on December 10, but remain hesitant on naming cabinet members and providing full details on a future economic strategy while observing the financial markets in the meantime. Pablo Soria de Lachica notes that Fernández's government is likely to seek renegotiation of the 2018 IMF agreement, stop paying interest on certain short-term government debts, and maintain current capital controls while reintroducing new ones if needed, all in hopes of avoiding a default on the country's sovereign debt that could hinder the progress made on international investment in recent years.
Pablo Soria de Lachica is an internationally renowned broker and foreign exchange expert. An MBA graduate of Universidad Tecnológico de México, Pablo currently collaborates with Kartoshka, a leading innovator of technology for sales, telemarketing and customer support. Pablo Soria de Lachica also develops integrated online trading tools for investors, conducts market analysis, and oversees the day-to-day financial operations for several prominent international companies. A devoted philanthropist, his community support includes active involvement in local Boy Scouts and Delta Epsilon Sigma programs, along with contributions to organizations that include the America-Israel Cultural Foundation, Jewish Federation of Greater Phoenix, and Bridges for Peace.
Pablo Soria de Lachica - Foreign Exchange Specialist: http://PabloSoriaDeLachicaNews.com
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SOURCE: Pablo Soria de Lachica
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