Argentina's central bank must toe a politically fraught line between suppor...
BUENOS AIRES - Argentina’s central bank must toe a politically fraught line between supporting the peso without blasting through the bank’s reserves, as policymakers seek to salvage the currency ahead of October’s presidential election, analysts said on Friday.
On Friday afternoon, in a fresh headache for Argentine policymakers, Fitch downgraded Argentina’s sovereign debt rating from “B” to “CCC,” flagging an increased likelihood of a default. “Nevertheless, the recent currency run and risks of further pressure and volatility are detrimental for sovereign debt sustainability, which had previously been predicated on expectations of a real peso appreciation,” Fitch warned, while also highlighting risks to growth and inflation.
“Fernandez is the big favorite to win the elections. But with Macri and Fernandez still in campaign mode, the transition will be difficult, with little incentive to calm the markets,” Citi said.
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