Argentina’s peso plunge incites frustation at mauricio macri – washington times gas station near me


The dollar, worth just short of 21 pesos at the end of April, was selling this week for about 25 pesos. The decline was so steep that it unnerved locals long accustomed to the ever-weakening currency, which was once pegged to U.S. tender. On the day Mr. Macri was elected in December 2015, the dollar was worth barely over 9 pesos.

It also prompted a frenzied response from central bankers, who sought to prop up the peso by hiking interest rates by almost 13 points, to 40 percent, and by selling off some $9 billion in foreign currency reserves. The peso hit a historic low against the dollar on Monday, although there was faint sign it was firming up by Wednesday.

Carmen Reinhart, a Harvard economist specializing in international finance, turned heads this week when she told the Bloomberg News service that the emerging market economies are showing “more cracks now than they did five years ago and certainly at the time of the [2008] global financial crisis.”

“Clearly, what happened this week is that the world has decided that the velocity at which we had committed to reducing the fiscal deficit is not enough,” Mr. Macri told reporters at the Olivos presidential residence on Wednesday. “So we’ll need to speed things up.”

The president, a onetime business associate of Donald Trump whose acumen with money was supposed to be one of his strongest assets, has called for a grand bargain with opposition leftist lawmakers, governors and union leaders to further rein in deficit spending, which he insisted was the source of all of Argentina’s financial troubles.

“It’s a vulnerability because we depend on the world to lend us money, something we must change,” Mr. Macri said. “We Argentines have dragged along this problem, which weighs down all of society. So I believe it’s time to tell the truth: No more shortcuts, no more patches.”

Mr. Macri’s May 8 decision to ask the International Monetary Fund for a $30 billion line of credit, ostensibly intended to inspire confidence, seems to have done just the opposite given Argentina’s troubled history with international lenders.

“It’s a sensitive topic [because] it reminds us … of somewhat traumatic experiences the country lived through,” said Mariano de Vedia, a political commentator for the La Nacion daily. “That doesn’t mean the [IMF] negotiations won’t be positive. But there’s an old saying: ‘He who scalded himself with milk cries when he sees a cow.’”

“The [IMF] is a serious institution with which one makes good or bad deals; we’ll make a good deal,” Mr. Macri said. “We’re talking about hundreds of schools we can build, with the [savings] in interest, we’re talking about thousands of miles of freeway. … This must be a time of pragmatism.”

“I’d like for us to not depend on the dollar,” Mr. Massucco said while sitting in front of a rack adorned by a sizable Argentine flag. “I’d like for the country to be run in a way so as to not depend on the [IMF], of course, not depend on another country’s economy, especially that of the United States.”

While Mr. Macri praised his economic advisers Wednesday, the peso meltdown was affecting the wallets of bargain hunters along Florida Street, the busting Buenos Aires shopping mile where dozens of unlicensed money changers offer their services with their trademark, high-decibel cries of “Cambio, cambio.”

“You see it reflected in the value of a spare part of a cellphone, a tablet, whatever,” said Mr. Massucco, whose store sits inside the street’s Galeria Jardin electronics mall. “Buying from a wholesaler with a 30-day check means exacerbated dollar futures. … The dollar causes [price] hikes of all kinds.”

All but certain, though, is that the government’s annual inflation target of 15 percent — already boosted from the 10 percent estimate — has become wholly illusory. Unidentified officials warned this week that 20 percent and even 25 percent were more realistic objectives.

“You know what’s happening? You spend more. You have new price tags and old salaries,” Mr. Mendez said as he chatted with one of his regulars, a retired central banker. “Money in the street contracts, so there’s less in sales. It’s math; no need to be a guru [like] Milton Friedman.”

In the meantime, halfhearted acknowledgments of errors — with Central Bank President Federico Sturzenegger conceding that markets were not “convinced” by his monetary policy and Mr. Macri faulting himself for being “too optimistic” — have done little to tame tempers.

It’s advice Mr. Macri may want to heed if he wants to remain in office beyond October of next year, especially since voters have already shown an uncharacteristic amount of patience as they await his administration’s long-promised economic revival.

“In a way, [he] has been weakened; it just so happens that no other sector, party or candidate has tapped into this situation,” said Mr. de Vedia, the La Nacion analyst. “The [peso crisis] further delays the recovery, and that causes frustration and dissatisfaction.”