Argentina’s peso fell sharply against the US dollar in the informal market on Monday following the appointment of new Economy Minister Silvina Batakis.
The black market exchange rate, which although strictly illegal is tolerated, closed at 267 pesos, after ending Friday at 239 pesos. It opened on Monday at 280 pesos.
Batakis, 53, was named as the new economy minister on Sunday following the shock resignation the day before of Martin Guzman, who had led Argentina’s negotiations with the International Monetary Fund on restructuring the repayments of a $44 billion debt.
Batakis must tackle an economic crisis in which inflation over the last 12 months topped 60 percent, the poverty rate is at 37 percent, and unemployment is seven percent.
Guzman was widely credited with having saved Argentina from defaulting, but the deal was deeply unpopular among many within President Alberto Fernandez’s ruling coalition, not least the vice president and former leader Cristina Kirchner.
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While Guzman is a close Fernandez ally, Batakis is a staunch Peronist close to Kirchner.
Her appointment is seen as a victory for Kirchner in a power struggle with Fernandez.
Argentina operates an official exchange rate, which stood at 132 pesos against the US dollar, depreciating by just over one percent on Monday.
The parallel, or ‘blue’ exchange market is much smaller but does provide an indication to the expectations for the official market.
The Buenos Aires stock exchange dropped more than 2.5 percent at opening but had recovered most of that by close when it was down 0.87 percent for the day.
Batakis, a 53-year-old economist, was economy minister for Buenos Aires province, the most populous and the poorest in the country, from 2011 to 2015.
Her previous position was at the interior ministry where she cultivated a strong relationship with provincial governors, who met her appointment with “universal acceptance,” cabinet chief Juan Manzur said on Monday.
When she was Buenos Aires economy minister, her governor was Daniel Scioli, the current minister for productive development, who is also a staunch Peronist.
“Silvina is a woman who is in contact with the real economy, with people who have day to day problems,” Scioli said on Monday.
On her first day on the job, Batakis held a four-hour meeting with Fernandez and also met Guzman and the head of the central bank, Miguel Pesce.