Argentina Peso Plunges After New Leftist Finance Minister Named

Argentina is facing some financial woes after the peso fell, with stock prices in the country also going down. This comes after moderate finance minister Martín Guzmán resigned from the cabinet, and Argentinian President Alberto Fernández named leftist Silvina Batakis as his successor.

Guzmán was seen as a moderate voice in leftist President Alberto Fernández's Cabinet. With him appointing a fellow leftist in Silvina Batakis, Yahoo! Finance reports that there may be a shift towards populist policies and state spending, and this has made several economists weary.

Guzmán has sparked criticism from the more left-leaning wing of the Fernandez government, including Vice President Cristina Fernández, who is not related to President Alberto Fernández.

Argentinian Peso Value Goes Down 18%

The Argentinian Peso's value dipped by 18% in the informal market last Monday, according to the Associated Press. It reached a new low of 280 pesos per dollar, though it would recover later in the day. However, government bond prices also plunged by as much as 10% that day. This deepened worsening fears of inflation, as well as a fall in stock prices.

While the price of the Argentinian Peso dipped by 18%, analysts said it is still too early to say that it has reached a new low. The primary reason for this was that trading activity was very light on Monday, indicating that many were waiting to see what will happen next with Batakis taking over the Ministry of Finance. Economist Gustavo Ber told the Associated Press that these prices must be taken with a grain of salt.

Unfortunately, not all see it that way. Others are still worried that inflation might still worsen under Batakis. Another economist, Marcos Buscaglia, said that the peso's slide was a pretty strong reaction from the free market, and it is what they expected.

Silvina Batakis Facing 60% Inflation Rate and Other Economic Fears

Guzmán's resignation may have stemmed from the faction of former Argentinian President and current Vice President Cristina Fernández, who has been a vocal critic of the former finance minister's deal with the International Monetary Fund (IMF), as well as his austere approach to the economy.

Vice President Cristina Fernández is seen as a powerful player in Argentine politics. She and other left-leaning elements of the government opposed Guzmán because they felt that Argentina made too many concessions that might hamper growth.

Silvina Batakis, meanwhile, is seen as a close ally to the vice president, with plenty of economic experience as a former local government economic minister for Buenos Aires. Her appointment might place a huge question mark on whether or not Argentina will move forward with its heavily-criticized IMF deal under Guzmán.

As she takes office, she will hurdle many economic problems aside from the Argentinian Peso and the stock market falling. She is currently facing a 60% inflation rate, as well as rising poverty rates in the country.

Yahoo! Finance reports that Batakis moved quickly to calm down fears after she was sworn in as the new minister. She promised fiscal responsibility and stability as she took office. After she moved to calm fears, the peso rose more than 1% to 257 pesos per U.S. dollar.

This article is owned by Latin Post.

Written by: Rick Martin

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