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ECONOMY | 22-04-2023 08:13

Argentina’s Massa rejects devaluation speculation as peso sinks

Revealing WhatsApp message from Economy Minister Sergio Massa denies market speculation about president's imminent resignation and potential currency devaluation.

Argentine Economy Minister Sergio Massa dedicated his Friday to denying market speculation about President Alberto Fernández resigning and a currency devaluation, according to a candid audio message he sent on WhatsApp to a group chat as the peso hit record lows. 

“No man, it’s impressive the amount of rumours. I’ve spent the whole day answering private messages that there isn’t a devaluation coming Monday, nor will Alberto resign or leave the government this weekend,” Massa said in the 27-second audio clip. “It’s all delirious, almost sickening, and beyond that it’s all bred in the market.” 

Massa’s press office declined to comment. Massa sent the voice message Friday, according to three people with direct knowledge. Hours earlier, Fernández confirmed that he wouldn’t run for a second term in this year’s presidential election, but said he would finish his term until a new government takes office in December. 

Fernández’s decision not to seek a second term shows “his generosity,” Massa wrote in a tweet Friday afternoon, noting that “responsibility and unity are the only path.” Massa himself is widely considered a potential presidential candidate. 

Massa’s revealing audio came as a renewed peso sell-off is exacerbating pressure on an economy already heading into a deep recession due to inflation over 100 percent and the worst drought on record that’s ruining key commodity exports, a lifeline for Argentina.  

The peso also lost 13 percent of its value on a commonly used parallel exchange rate this week, its worst period since a political crisis erupted last July. The parallel rate, known as the blue-chip swap, closed Friday near 455 pesos per dollar, way above the official rate at 219 per dollar which is controlled by the government. 

“The decision of @alferdez shows his generosity and leaves a mark going forward. Responsibility and unity are the path," wrote Massa.

The widening gap between the parallel and official rate is reviving speculation that the government will have to devalue the official rate — something Massa and Fernández have pledged never to do — or risk worsening the crisis. 

This most recent sell-off in Argentina came after inflation data on April 14 showed prices rose more than expected at an annual pace of 104 percent. Making matters worse, dollars sales by soybean exporters slowed to a crawl this week despite the higher exchange rate offered to them, depriving the government of much-needed hard currency. 

by Ignacio Olivera Doll, Bloomberg

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