Argentina's central bank is planning to hold fire for now on any major policy adjustments after a shock win for the Peronist government in a general election on Sunday, two bank sources said, a sharp contrast to rapid moves after an August primary, Reuters reported. Economy Minister Sergio Massa outperformed in a first round election on Sunday to take pole position ahead of a run-off vote next month where he will face radical libertarian Javier Milei, who wants to dollarize the economy and shut the central bank.
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Argentina
Argentina's central bank raised the country's benchmark interest rate to 145% from 118% on Thursday, a source close to the matter told Reuters, as the South American country battles triple-digit annual inflation. The hike follows the rapid freefall of Argentina's peso, with the currency surpassing the psychological barrier of 1,000 pesos per U.S. dollar earlier this week with less than two weeks before a crucial presidential election.
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Economics says it’s way past time for the International Monetary Fund to pull the plug on Argentina. Geopolitics helps explain why it hasn’t — yet, Bloomberg News reported. Over the past five years, the Fund has lent $43 billion in repeated bailouts for the Latin American nation — multiples more cash than anyone else has gotten — with dismal results. On the eve of a pivotal presidential vote, Argentina has 124% inflation and its economy is in deep recession again. The latest IMF program, like so many predecessors, has essentially collapsed.
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Brazilian auto exports are set to plunge by double digits in 2023 when compared with the previous year, automaker association Anfavea said on Friday, as a severe economic crisis in neighboring Argentina hits shipments to that country, Reuters reported. The association said in a statement it now projects exports to fall 12.7% in 2023 to 420,000 vehicles, a major cut from its previous estimate of a 2.9% drop in the period. "Exports have been the major warning point for the automotive sector in the first nine months of the year," it said.
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Argentina's central bank is set to leave its interest rate unchanged at 118% at the directors meeting scheduled for later Thursday, an official source at the bank said, Reuters reported. Argentina is struggling to tamp down on triple-digit inflation as presidential elections loom just several weeks away. The central bank held the rate at 118% last month after raising it from 97% in the aftermath of a shock primary election which saw radical libertarian Javier Milei become the favorite to win the presidency this month. Annual inflation is running at 124%.
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A public spending boom and generous tax cuts carried out by Argentina’s Economy Minister Sergio Massa, who’s also running for president in the October election, pose new setbacks to the country’s $44 billion program with the International Monetary Fund, according to the Washington-based lender, Bloomberg News reported. “The recently adopted policy measures and announcements add to Argentina’s challenges,” IMF chief spokesperson Julie Kozack said at a press conference in Washington Thursday.
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Burford Capital said it would be seeking court permission to begin attaching Argentine assets within weeks to satisfy a $16 billion judgment, saying it was clear that the South American nation had “no intention” of paying, Bloomberg News reported. In a letter Friday to US District Judge Loretta Preska in New York, London-based Burford said it intended to ask her to set Oct. 16 as the date it can begin efforts to execute the judgment and attach assets. Preska earlier this month ordered Argentina to pay the award over its 2012 expropriation of foreign investment in oil company YPF SA.
Argentina's economy shrank 4.9% in the second-quarter of 2023 versus the year-ago period, the country's statistics agency said on Tuesday, slightly missing analysts' forecast of a 4.8% contraction and posting the first break in growth for years, Reuters reported. Tuesday's result marks the first time the country's growth was in the red since 2020. The agricultural sector registered the highest drop, with a 40.2% decrease compared to the same period the previous year.
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Diego Labat, Uruguay's central bank chief, is sitting pretty. Inflation is at the lowest level in nearly two decades, the currency is one of the region's strongest, and the country is leading a regional pivot towards interest rate easing, Reuters reported. That's a sharp contrast to just across the Rio de La Plata estuary in Buenos Aires, where inflation hit 124% in August, the highest since 1991, capital controls are barely holding back a fall in the currency, and net reserve levels are in the red.
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Argentina's central bank (BCRA) board members decided to hold the benchmark interest rate steady at 118% at a meeting on Thursday, a source familiar with the matter said, despite the country's inflation rate hitting an over 30-year high in August, Reuters reported. August inflation data published on Wednesday showed annual inflation running at over 124%, with the monthly rate at 12.4%, its highest level since 1991, deepening a cost-of-living crisis ahead of the presidential elections scheduled for October.
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