Argentina’s peso fell sharply against the US dollar on the informal market Monday after the appointment of a new economy minister who sought to calm investor jitters by vowing to pursue “fiscal balance.”
Silvina Batakis was named on Sunday after the shock resignation of Martin Guzman, who had led Argentina’s negotiations with the International Monetary Fund on restructuring repayments of a $44 billion debt.
Batakis, 53, must tackle an economic crisis with inflation over 12 months at 60 percent, a poverty rate of 37 percent, and unemployment at seven percent.
The black market exchange rate, which although strictly illegal is tolerated, closed at 267 pesos Monday, after ending last week at 239 pesos. It opened on Monday at 280 pesos.
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 vice president and former leader Cristina Kirchner.
While Guzman is a close Fernandez ally, Batakis is close to Kirchner.
Her appointment is seen as a victory for Kirchner in a power struggle with Fernandez.
On Monday, Batakis said “I believe in fiscal balance” at her first press conference, where she declined to answer questions.
She also spoke of the importance of boosting Argentine exports and strengthening the currency.
Argentina operates an official exchange rate, which stood at 132 pesos against the US dollar on Monday, depreciating by just over one percent.
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, an economist, was economy minister for Buenos Aires province, the most populous and 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.
“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, also meeting Guzman and the head of the central bank, Miguel Pesce.