Monday, 15 July 2024

Argentina is devaluing its currency by more than 50 percent as part of the emergency

  • IMF leader Kristalina Georgieva stated, “I welcome the decisive steps, which can be an essential step toward restoring balance and rebuilding the united states of America’s monetary capability.”
  • The country’s foreign exchange and grain markets remained closed on Tuesday as traders awaited the new government’s economic plan.
  • The grains ministry is expected to meet the government later on Tuesday, Reuters reported, citing sources.

As he unveiled a package of measures after libertarian President Javier Milei took office on Sunday, Caputo said the plan would be painful in the short term but needed to reduce fiscal deficits and triple-digit inflation.

“The goal is to avoid a disaster and get the economy back on track,” Caputo said in a taped speech. He said there was a need to tackle the deep fiscal deficit, which stands at 5.5% of GDP, and Argentina has had 113 fiscal deficits in the last 123 years

Argentia is seeking $44 billion in debt

The South American country, a major grain producer, has inflation approaching 150%, central bank balances in the red and two-fifths of the population in poverty. It has a $44 billion loan from the International Monetary Fund.

IMF chief Kristalina Georgieva said, “I welcome the decisive steps, which are an important step towards restoring stability and rebuilding the country’s economic potential.”

The International Monetary Fund called the measures “bold” and said in a statement that they would “help stabilize the economy and lay the groundwork for more sustainable and private-sector-led growth” following “severe policy setbacks” in recent months.

The country’s foreign exchange and grain markets remained closed on Tuesday as traders awaited the new government’s economic plan. Banks were already anticipating a sharp devaluation, with some weakening their FX rate to 700.

Since 2019, Argentina’s peso currency has been kept artificially strong by strict capital controls, creating a wide gap between the official exchange rate of 366 per dollar and the equivalent rate of 1,000 per dollar.

Milei, a wild-haired political outsider, campaigned on promises of big spending cuts, often wielding a chainsaw at rallies as a stark symbol of plans to reorganize the state.

“The situation is imperative with forty five% poverty and 200% annual inflation,” presidential spokesman Manuel Atorni told a press conference in advance. “We are heading towards hyperinflation and the goal is to avoid that.

Miley’s tough fiscal rhetoric — along with a new mantra of “no money” — buoyed markets after her election victory, with the S&P Merval stock index hitting a record high on Tuesday and sovereign bonds rising nearly 4%.

Analysts stated the brand new measures despatched a robust message.Shamaila Khan, head of fixed income for emerging markets and Asia Pacific at UBS Asset Management, said, “The devaluation was reported to have exceeded market expectations.

“Few details of fiscal reforms such as reducing subsidies and reducing public expenditure were announced. Implementation will be key.”

Caputo, echoing Milei’s earlier promises, said the government would gradually eliminate export tariffs, something farmers have long wanted. Argentina is a leading exporter of processed soy oil and food 3 for corn.

The grains ministry is expected to meet the government later on Tuesday, Reuters reported, citing sources.The main doubt is whether Milei’s Freedom Alliance, the third-largest coalition in Congress, can implement the sharp cuts needed to reverse deep fiscal deficits without plunging the South American country into turmoil and unrest.

“This adjustment will be painful, and the route forward is fraught with economic, political and social risks,” Fitch rankings said in a statement.

The central bank, which confirmed new chairman Santiago Bausili overnight in the official gazette, said it would undo “change” checks on FX trades from Wednesday morning, after allowing only priority trades for the rest of the week.

The economy ministry posted on Twitter that the central bank will announce measures on interest rate, credit and monetary policy on Wednesday to complement its own actions.

Related posts

Wiz Khalifa Charged with Drug Possession in Romania

Wiz Khalifa was charged with illegal drug possession after a performance in Romania. He was…
Read more

Challenges and Declines: Moroccan Coastal and Artisanal Fishing in 2024

Moroccan coastal and artisanal fishing saw a 4% decline in product values in the first half of 2024…
Read more

Ramaphosa's Cabinet Lekgotla: Prioritizing Economic Growth and National Unity

President Ramaphosa to unveil government priorities at Parliament opening. Focus on economic…
Read more
Become a Trendsetter

To get your breaking, trending, latest news immediately without diluting its truthfulness join with worldmagzine immediately.

Leave a Reply

Your email address will not be published. Required fields are marked *


Australia's economy is barely growing, with surprisingly low consumer spending

Worth reading...