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Maintaining the value of the Argentine peso could cost the Peronists the election

The Argentine currency, the peso, in its different exchange markets could complicate the national government, Peronism, in the next legislative elections and cost them the majority in Congress.

The local currency, which a little more than two decades ago maintained a one-to-one parity against the dollar Currently, it is barely equivalent to one cent of the dollar for each peso, while in the informal market, where foreign exchange can be accessed without any official control but at a much higher price, that parity fell to half a cent of the dollar. .

The president’s center-left Peronist government Alberto Fernandez faces a probable defeat in the legislative elections of November 14, which could hinder the second half of his term and shake his government collation, already weakened by the results obtained in the primary elections.

One of the factors that drives the anger of the voters, in part, are the problems of an increasingly unstable currency, which is trading at 100 pesos per dollar in the interbank market and at 200 or more in alternative places, which generates fears of devaluation and higher inflation.

“Inflation and devaluation affect my daily life every time I buy something,” said Marina Smith, a 42-year-old travel agent, “it even happens to me that I see the value of something and I no longer know if it is expensive or cheap. Oh, it’s fine”.

The instability in the currency, together with the problems of the pandemic, have hit it professionally, with exchange restrictions, taxes and the devaluation of the peso, which make it more expensive and difficult for Argentine tourists to travel abroad.

“At the time of voting I do take these factors into account but they are not the only ones, I try to see a broader picture of long-term policy issues and so on, but it is a factor although not the only one,” Smith added, without specifying to who would vote.

The Argentine government maintains a constant fight against inflation, which according to analysts could exceed 50% in 2021, and which is aggravated by fears of a greater devaluation in the currency and the higher cost of replacement of goods, due to the fact that traders access products with values ​​of informal exchange rates.

The Argentine peso in unregulated markets recently surpassed the psychological barrier of 200 units per dollar, which caused the gap against the wholesale market to exceed 100%.

The gap between the two markets became relevant at the end of 2019 after the victory in the Peronist elections, which caused a market crash and led to capital controls and since then the gap has widened.

“The problem with the (exchange rate) gap is that it generates a change in incentives, and also in expectations,” said Isaías Marini, an economist at Econviews consultancy.

“Right now we are having gaps that are above 100%”, adding that “the expectation of devaluation generated by the gap translates into an increase in prices.”

For his part, the Argentine Minister of Economy, Martín Guzmán, has publicly stated that the Government will not allow a further devaluation of the currency, although analysts and operators maintain their skepticism in a country accustomed to inflation that erodes wages and that no Government has managed to control or explain.

“(Inflation) terribly influences the collapse of the mood of public opinion,” declared political analyst Jorge Giacobbe, expressing it as “rampant inflation.”

“The people who are going to give the slap (in the midterm elections) believe that what is coming is even worse,” he added.

Vote with your pocket

Following the defeat in the primary elections (PASO) last September, the national government has implemented measures to boost growth and put money in the pockets of voters.

This has caused transfers from the Argentine central bank (BCRA) to the Treasury to soar, while the international reserves of the monetary entity have been reduced by the interventions it carries out in the markets in order to maintain a controlled and accepted devaluation by the Government.

Despite these interventions, Argentines maintain their interest in the US currency as a form of refuge from eventual economic or political ups and downs, despite high prices and the controls to access it.

Pablo Tufarolo, 38, owner of a cell phone repair and sale business in the Argentine capital, commented that the impact of the exchange rate was enormous and that its costs were tied to a dollar to 200 pesos, which made it difficult to pay. rent and wages.

“The truth is that I would like to vote blank or annul the vote,” he said, regretting that no government has done anything to help the situation in the country.

The national government is also trapped in extensive negotiations with the International Monetary Fund (IMF) to renegotiate a loan for US $ 45,000 million that it cannot pay, and any agreement will have to be discussed in Congress.

Raúl Olaciregui, a 57-year-old industrial worker from Azul, Buenos Aires province, said that people “vote with their pockets.”

The province of Buenos Aires, a stronghold of Peronism in the different elections, leaned strongly towards the opposition in the PASO.

“For a long time we have suffered with so much inflation and devaluation, every day everything increases more and what we earn is barely enough to make it to the end of the month, if it can be reached,” said Olaciregui.

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