Argentina's peso tumbled to a record low in the popular black market as an election build-up sows uncertainty and the economy shows strains beyond the country's all-important grains exports, hit by a crippling drought
The peso hit an all-time low of 460 per dollar on Monday in a black market that has flourished as the official foreign exchange market is under tight controls. That is down from 400 pesos per dollar just a week ago and compares to the official spot rate of around 220.
"Devaluation rumors have abounded in Argentina ever since Fernandez became president. Yet against what economic logic would suggest, it has not happened," said Carlos de Sousa, EM debt strategist and portfolio manager at Vontobel Asset Management. Fernandez said last week he will not run for re-election in October, which could give him cover to enact a very unpopular move that would exacerbate inflation, already running above 100% annualized.Data on Monday showed monthly economic activity was flat in February even as it expanded 0.2% annualized, while last week the trade balance posted a surprise $1.1 billion deficit, further pressuring the currency.
"A bad harvest, tight FX and import controls, and headwinds from the very high inflation and growing macroeconomic imbalances and distortions should keep real activity data weak through 2023."2.3% this year, the worst performance among the G20 countries, with inflation seen ending the year above 100%, according to median estimates from economists polled earlier this month.The weak data has further muddied the waters in Buenos Aires.
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