Argentina's Macri alleged to have allowed peso to plummet for political reasons
Former Argentine Central Bank President Martín Redrado stated today that government sources disclosed to him that President Mauricio Macri ordered the central bank not to intervene during a selloff in the peso on Monday for political reasons.
Macri's alleged decision was made the morning after a drubbing in the first round of presidential voting on Sunday.
Confounding most polls and amid high turnout, Macri lost by 15.6% to center-left opposition candidate Alberto Fernández - making the pragmatic Fernández the likely winner of a second round on October 27.
"There was a political order on Monday to allow the exchange rate to float, creating a megadevaluation," Redrado stated.
"The President said on Monday that 'the dollar will go where it has to, such that Argentines may learn whom they voted for'."
Self-inflicted
Redrado, 57, served as central bank president between 2004 and 2010.
His allegation echoed statements made on Wednesday by Luis Caputo, who headed the central bank from June to September 2018 - and is the first cousin of Macri's best friend, Nicolás Caputo.
"The fall (in the peso) was exaggerated - and self-inflicted. It can't be that the central bank allows the dollar to rise by 5 or 8% due to a $5 million trade."
The dollar climbed 23% on Monday, from 46.55 to a record 57.30 pesos - its sharpest since Macri's own, December 17, 2015, devaluation just a week after taking office.
But trading volumes were moderate in Buenos Aires' official foreign exchange market (MULC): $550 million (including public sector sales), compared to an average the previous week of $800 million a day.
The Argentine National Bank, the country's largest, offered dollars at 51 pesos when the market opened on Monday (9.5% above Friday's close).
Absent official intervention, the dollar rose sharply in early hours to an intraday record of 63 pesos - until a $105 million central bank dollar sale at 1:30 p.m. reversed the trend, helping ease the dollar to 57.30.
The dollar closed today at 58.12.
"The central bank was obligated to sell $250 million should the dollar rise above 51.45 pesos - the currency band ceiling agreed to with the IMF," Redrado pointed out. "None of this happened."
Hoarding has been reported since Monday's devaluation, projected to push inflation from 2.2% monthly in July to 14% in August - the highest in 28 years.
Ratings agency Fitch today downgraded Argentina’s sovereign debt rating from B to CCC, calling Argentina's bond default risk "substantial."
At: https://translate.google.com/translate?hl=en&tab=wT&sl=auto&tl=en&u=https%3A%2F%2Fwww.politicargentina.com%2Fnotas%2F201908%2F30180-redrado-denuncio-que-macri-dejo-correr-el-dolar-para-que-los-argentinos-aprendan-a-quien-votar.html
Macri (second from left) and his top allies feign optimism during an election night rally after an unexpectedly severe drubbing on Sunday.
The central bank's inaction the next morning, which led to a 23% jump in the dollar against the peso on Monday, has led to calls for an investigation.
Macri, according to at least one insider, sought to "teach voters a lesson" and believed a sudden crash in the peso might turn the electorate against Sunday's winner, Alberto Fernández.
Polling instead shows voters holding Macri responsible for the crash, by 59% to 28%.
Other critics point to the fact that Macri and many of his top officials keep most of their assets abroad and in dollars - making them instant beneficiaries from a shock devaluation.
