Argentine FX Market Stability Amidst Election Turmoil and Soaring Inflation
Following the volatile response of the FX market after the primary elections, the Argentine economic and political landscape is in the spotlight. The 22% devaluation in the official FX rate after the primaries was short-lived, lasting only about 48 hours. At present, the rate has stabilized, with the official FX steadying itself at 350, and the difference with the blue chip rate reflects the levels observed before the primary elections.
The general elections are on the horizon, scheduled for October 22nd, and our current projections suggest that the FX market will likely remain stable without significant fluctuations leading up to this date. However, on the economic front, Argentina grapples with soaring inflation. INDEC's recent data reveals an alarming annual inflation rate of 124.4%, the highest since February 1991. A major portion of this inflationary surge stems from the food sector, which experienced a price rise of 15.6% between July and August alone. Remarkably, some beef cuts saw their prices skyrocket by as much as 40%.
On the political front, the latest Analogias poll indicates that Milei is in the lead with 31.1% support, with Massa trailing close behind at 28.1%. Patricia Bullrich, previously a conservative favorite, is now further behind at 21.2%. Interestingly, Milei seems to have struck a chord with male voters, the younger generation, and those from less affluent backgrounds. For a decisive victory in the first round, a contender needs 45% of the total votes or at least a 40% share with a minimum 10% advantage over the closest competitor. If this doesn't materialize, the top two candidates will go head-to-head in a runoff on November 19th.
To keep everyone informed, our team is preparing for a comprehensive post-election webinar. This will provide a deeper dive into the election results and discuss the potential economic implications for Argentina. We encourage everyone to watch out for the invitations in their inboxes.
For a more detailed understanding or to address any specific inquiries, feel free to reach out to us at 604-643-0101 or at cashgroup@cgf.com.
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