November 5, 2015 / 8:10 PM / in 2 years

As barbs fly, Macri team says no need to fear Argentina devaluation

Mauricio Macri arrives for a ceremony in Buenos Aires, October 28, 2015. REUTERS/Marcos Brindicci

BUENOS AIRES (Reuters) - Argentine presidential challenger Mauricio Macri’s campaign fought back on Thursday against ruling party claims that his plan to remove currency controls would unleash a sharp devaluation, saying it would instead reboot the ailing economy.

Macri’s pro-market plan to dismantle a web of controls on the struggling economy delights foreign and local investors, but has been at the center of government fear-mongering in an increasingly bruising campaign ahead of a Nov. 22 run-off.

The controls mean that $1 buys 9.58 pesos on the official rate but more than 15 on the black market. In between, Argentines pay a raft of different rates such as when using a credit card abroad and purchasing a restricted supply of dollars locally.

Alfonso Prat Gay, one of Macri’s top economic advisors, acknowledged the peso’s official rate would weaken if Argentina’s various rates of exchange were unified under a single rate, but said Argentines would still prosper.

“What will happen is the official rate will move higher, affecting almost nobody, while all the other rates will fall, helping a large majority of Argentines,” Prat Gay told Continental radio.

Prat Gay, who headed the central bank immediately after the 2001-2002 economic crisis, declined to say at what level he anticipated the rates would converge.

He added the central bank would still play a role in managing a floating exchange rate, appearing to moderate Macri’s previous calls for the peso’s price to be market determined.

Daniel Scioli, the ruling Front for Victory party’s candidate, advocates slow monetary reform. In a separate interview, Silvina Batakis, touted by Scioli as the next economy minister, cautioned Macri’s plans would trigger a surge in inflation.

“As soon as there is any devaluation, the pass through to prices is automatic, there is no delay,” she told Radio del Plata.

Batakis, who since late 2011 has run the economy ministry in Buenos Aires province where Scioli is governor, said the central bank “had to manage reserves and the exchange rate for the good of the whole country.”

“We don’t believe in the market having absolute freedom to control financial matters,” she said.

In a sign that Scioli is, however, slowly distancing himself from outgoing President Cristina Fernandez after a disappointing first round performance, Batakis said a Scioli government would clean up Argentina’s flawed economic statistics.

Argentina’s economic growth, inflation and poverty data is widely disputed.

”We are a member of the International Monetary Fund and we have to honor our commitments,“ Batakis said. ”Therefore we have to produce statistics according to their standards.

Reporting by Maximilian Heath and Richard Lough; Editing by Andrew Hay

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below