Argentina peso drops as left-leaning economy minister named

BUENOS AIRES (Argentina) -- The peso of Argentina fell Monday and stock prices dropped Monday as left-leaning Silvina batakis was appointed economy minister.

Argentina peso drops as left-leaning economy minister named

BUENOS AIRES (Argentina) -- The peso of Argentina fell Monday and stock prices dropped Monday as left-leaning Silvina batakis was appointed economy minister. This comes after her surprise resignation over the weekend.

Batakis was appointed late Sunday to replace Martin Guzman. Guzman was generally seen as a moderate voice in President Alberto Fernandez’s Cabinet. Guzman was the subject of harsh criticism from left-leaning elements in the governing coalition, including Vice president Cristina Fernandez, who is unrelated to the president.

Monday's informal market saw the peso drop 18%, and it reached 280 for every dollar before rebounding late in the day. The prices of government bonds fell as high as 10%, signaling worries about worsening inflation. Stocks also experienced declines.

The peso's volatility has meant that Argentines are largely able to save in U.S. Dollars and the exchange rate is closely monitored as a general indicator of the economy.

Analysts cautioned that it was too soon to determine if the peso has hit a new low. Monday's trading activity was light, which suggests that many people are waiting and watching.

Gustavo Ber, an economist and head of Estudio Ber in the locality, stated that these are prices that should be taken with a grain salt today.

Others said that it was a sign that Argentines fear that the current rate of inflation, which is currently at 60% per year, will increase under Batakis who was sworn into office late Monday afternoon.

Marcos Buscaglia, an economist and partner at Alberdi Partners, said, "This is what I expected. A pretty strong reaction by the markets."

Over the weekend, Argentines crowded into shops to purchase big-ticket items such as ovens and refrigerators.

Buscaglia predicts that there will be more inflation. The appointment of Batakis is a sign that the government's policy preferences are dominated by the left-leaning vice presidency.

Fernandez herself was Argentina's president from 2007 to 2015 and still holds strong support. Fernandez has also publicly criticised austerity measures meant to control inflation.

Guzman was regarded as a close ally to the president. A seven-page letter posted on Twitter by Guzman at a time when tensions were high in the governing coalition over how to address the country's economic problems, Saturday, marked Guzman's resignation.

Batakis will also have to deal with inflation. In an economy where nearly four out of 10 Argentines live in poverty, and the Central Bank is at risk of running out of hard currency reserves,

Batakis is a veteran of public service. He was the economy minister for Buenos Aires, the country's largest district, from 2011 to 2015. Daniel Scioli was recently appointed federal production minister.

The future of the $44 billion debt restructuring agreement with the International Monetary Fund is a big question mark.

Many members of the left-leaning coalition publicly opposed the IMF deal, claiming that it makes too many concessions to the multilateral institution and will hinder growth.

Batakis is still waiting to outline her future plans for the country, but analysts warn that her path forward will be difficult.

Matias Carugati (an economist at Consultora Settio) stated that one would expect that the new minister would first try to calm down the financial market and then order the macro economy. It is hard to predict if that will happen today, as we don't have much information on the government plan. They are trying to ensure continuity in Guzman's activities, but it was that plan that caused his resignation.

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