Alberto Fernandez speaks in Buenos Aires, Argentina, August 11 2019. Picture: REUTERS/Agustin Marcarian
Alberto Fernandez speaks in Buenos Aires, Argentina, August 11 2019. Picture: REUTERS/Agustin Marcarian

Buenos Aires — Argentina’s peso fell by the most in almost two weeks on Tuesday after opposition leader Alberto Fernandez criticised an accord with the International Monetary Fund (IMF), saying it had failed to meet any of its objectives.

Argentina assets are extending three days of drops after Fernandez said much of the IMF loan had been wasted on financing capital flight out of the country.

Fernandez’s landslide victory in a primary election earlier in August  dealt a severe blow to President Mauricio Macri’s re-election chances.

The peso fell 1.1%, while Argentinian stocks extended three days of losses, and bond spreads over Treasuries widened 139 basis points.

The decline in the peso could have been worse if the central bank had not sold $250m  into the market, according to people with knowledge of the matter.

IMF visit

A technical team from the IMF is in Buenos Aires to decide whether it gives out the next disbursement of its $56bn loan deal. In a statement following a meeting with IMF officials, Fernandez said he agreed with the objectives of the IMF deal, but added that the IMF and the current government generated the crisis and are responsible for reversing the “social catastrophe”.

“Alberto Fernandez’s statements after the IMF meeting created noise,” said Joaquin Gonzalez Gale, FX trader at INTL FCStone in Buenos Aires. “Today, anything he says is blown out of proportion.”

If the IMF decides to give the next disbursement, that would reassure the market and lead the interest rate on short-term dollar notes known as Letes to drop sharply, Gonzalez Gale said. Until then, traders worry about what the contingency plan might be.

“The problem is now banks are wondering what will happen if the Treasury doesn’t receive these dollars” from the IMF, he said.

The government is selling 35-day and 140-day Letes on Tuesday, as well as 35-day peso-denominated Lecaps on August 28.

Bloomberg