The Argentine peso is currently hovering around record-low levels sparked by the political uncertainty of the presidential elections toward the end of this year. Crumbling under pressure as President Mauricio Macri continues to lose popularity ahead of the polls, the struggling currency weakened to 1.32 percent to touch a record low of 44.0 per US dollar on Friday. The peso, which lost more than half its value against the American greenback last year after being dogged by recession and rampant inflation, is trading at 43.69 as of 10.40am UK time. President Macri is seeing a downturn in support ahead of his October re-election bid, with voters being hit by his public utility subsidy cuts and other austerity measures.
Argentina will face financing needs of $27.3 billion next year, according to data published on Friday by the treasury, up from its previous estimate of $25.9 billion.
The data showed that peso-denominated debt issuance was seen at $17.8 billion next year, up from a previous forecast of $16.1 billion.
Analysts have commented on the peso’s sensitivity to political upheaval and expressed concerns over Latin America’s third-largest economy ahead of the election.
Carlos de Sousa, a senior economist at Oxford Economics, told CNBC: “Both the government and the central bank are worried about another currency crisis before the election.”
Last year saw the Argentine economy shrink by more than 6 percent in the final three months of 2018.
While official data published in March showed an increase in poverty with the current rate of destitution at over 32 percent.
The International Monetary Fund described the upcoming election as the “most visible near-term risk” to the economy and warned it could raise market anxiety.
However, the group suggested Argentina’s economy would contract by 1.2 percent this year, an improvement on the previous forecast of a 1.7 percent.
Christine Lagarde, the IMF’s managing director, said the government needed “continued prudence” in executing its spending plans and strengthening revenues.
Argentina agreed on a $56.3 billion standby financing deal with the IMF last year.
Ms Lagarde said the measures were “bearing fruit” and there were signs of revival in the economy despite inflation “proving difficult to break”.
Benchmark interest rates now stand at 66 percent with annualised inflation running at over 50 percent.
She said: “Economic activity contracted in 2018 but there are signs that the recession has bottomed out, and a gradual recovery is expected to take hold in the coming quarters.”