Macri uses peso rout as political ammunition

Buenos Aires – After a stunning defeat in the presidential primaries, Argentina‘s incumbent president Mauricio Macri used his nation’s plunging currency as political ammunition against the opposition, saying the economic fallout was a taste of what was to come if voters elect Alberto Fernandez and his running mate, former President Cristina Fernandez de Kirchner.

Investor concerns that Fernandez’s victory could herald a return to populist economic policies continued to hammer the Argentine peso on Tuesday after the currency hit a record low on Monday of 65 pesos to the US dollar. Argentine stocks and bonds were also pummelled on Monday but stabilised on Tuesday in early trading.

During a news conference in Buenos Aires on Monday, President Macri pinned the blame for the rout in Argentine assets on his opponent.

“The biggest problem is that the Kirchner alternative does not have credibility in the world,” Macri told reporters. “I’ve been saying this for three and a half years. It does not have the necessary confidence so that people want to come and invest in the country.”

But Fernandez struck back during an interview on Monday night on Net TV’s Corea del Centro, accusing Macri of spooking investors rather than assuaging their fears of a potential change in leadership.

“The only person who is responsible for what is happening in Argentina is named Mauricio Macri,” said Fernandez. “Instead of telling the world, don’t worry, Argentina’s economy is not at risk because the people who are coming are sensible, have paid all the debts that we always leave hanging, if he said that, then the markets wouldn’t worry. But what does he tell the markets: that we’re a band of crazy people. Is it our fault, or his? It’s his.”

Macri said his government will continue to take measures to blunt the effect of the selloff in Argentine assets, but that it is ultimately up to Fernandez and Kirchner to give signs that they have “learned from the past” and will change their policies.

Fernandez said on Monday that he has no intention of defaulting on loans, and expressed astonishment that the Macri government thinks it is on the right path.

Fernandez and his running mate, Kirchner, earned 47 percent of the vote in Sunday’s presidential primaries, to Macri’s 32 percent.

The vote is seen as a dramatic rejection of the neoliberal, economic austerity measures Macri has been trying to institute after 12 years of populist rule by Fernandez de Kirchner and her deceased husband, Nestor Kirchner.

Macri rose to power in 2015 on promises to fix a faltering economy and tackle corruption. But the country’s financial situation has worsened, with a recession, soaring inflation, unemployment and deep spending cuts that have hit poor and middle-income Argentinians especially hard.

A $57bn standby agreement Macri struck with the International Monetary Fund has been a key point of attack for the opposition.

The general election is scheduled for October 27, with a runoff slated for late November should a victor not secure at least 45 percent of the vote or at least 40 percent and a ten-point spread for the runner-up. Analysts had predicted that the markets would react adversely to a poor showing for Macri at the polls, but no one had predicted such a dramatic defeat.

Ignacio Labaqui, an analyst with Medley Global Advisors and professor at the Catholic University of Argentina, expects the volatility in the markets will hurt Macri, not Fernandez.

“The market’s reaction was around what I would have expected, and I think there is still more to happen,” he said, describing a “difficult dynamic” in the lead-up to the October vote. “You have a government that is still in campaign mode, and an opposition that while it may have an incentive to incite calm in the markets, it’s not in the position to do the government’s job,” he told Al Jazeera. 

Labaqui suggested that Macri’s discourse generating “terror” among the voting public will not help his electoral chances. “I think the discontent, the break between voters and Macri has been a long time coming. It’s like a couple, in which one person was unfaithful to the other, and the other could never forgive them for it,” he said.

On the streets of Buenos Aires, there was indignation all around. 

“He’s [Macri] been in power for three and a half years. I think it’s a bit much that he’s blaming the other guys,” said Mariano Acevedo, a maintenance worker at an old age home in Buenos Aires.

“I voted for [Macri before] because I thought he understood economics,” said Jorge Insaurralde. A superintendent of a Buenos Aires building, Insaurralde told Al Jazeera that he voted for Fernandez on Sunday because he feels “misled” by Macri.

“You never hear him [Macri] be self-critical,” said Gabriela Raide, an administrator at a university and a Fernandez voter. “I don’t think they understood how to govern. Or they did, but it’s not a way in which it helps most people.”

Anna, a retiree, was also sour – but about the primary results, not the president.

“We’re returning to the past, we already know what they did to us,” said Anna who asked Al Jazeera not to publish her surname to protect her privacy. “It’s not that I loved what Macri did in these last four years, but I don’t think anyone could do much with the disaster that the Kirchners left. How do you repair a country where everything was stolen?”

Hugo, a lawyer who also asked Al Jazeera to withhold his surname to protect his privacy, said he voted for Macri because he thought the president’s political project has more long-term sustainability. But Hugo added that the worsening economic situation could end up favouring the opposition if it wins in October because a weak peso could boost the country’s exports by making them cheaper to buy abroad.

Insaurralde isn’t concerned about how the peso’s value impacts political fortunes. “I’m worried that it doesn’t help us at all,” he said, standing on the steps of the building he manages. “Because tomorrow we’re going to go out and buy beef, and it’s going to [be] twice the price that it was today.”