Argentina’s peso has slipped to a fresh record low over fears of a political comeback for the populist former president Cristina Fernández de Kirchner in important mid-term elections in October.
A poll released on Sunday showed President Mauricio Macri’s party in a technical tie with Ms Fernández’s newly-launched coalition in elections that could determine the future of the government’s market-friendly reform programme.
The peso has been steadily weakening lately after trading between 14 and 16 per dollar for most of the time since a December 2015 devaluation, slipping lower every day last week. But on Monday the Argentine currency shed 1.2 per cent of its value to trade at 16.825 versus the dollar, its third-worst performance this year.
A poll published by the newspaper Clarín showed that ruling party candidates would take 28.5 per cent of the vote in the key race in the province of Buenos Aires, which holds almost 40 per cent of the electorate. Meanwhile Fernández-aligned candidates would take 27.8 per cent, according to the poll carried out by consulting firm Management & Fit.
The October midterm elections are “critical to economic reforms and investment,” Bank of America Merrill Lynch analysts said in a report last week.
“The vote in the province of Buenos Aires will be one of the main indicators to determine who may win the elections. Most local investors believe a Kirchner victory in the province of Buenos Aires might slow investment decisions,” the bank’s strategists noted.
Although the peso hit new lows on Monday, many analysts say that the currency is still overvalued, after being bolstered by heavy capital inflows since Argentina returned to the international capital markets last year.