President Alberto Fernandez declines to run again amidst devaluation pressures
Last week, the adverse inflation result, added to the BCRA's worrying reserve and debt levels and concerns about the likely dollarization process before a presidential election triggered a flight to quality away from the peso, resulting in a significant depreciation of the informal and the Blue-Chip Swap (CCL) rate. Despite President Alberto Fernandez's interest in delaying such political capitulation in order to have more time to analyze his chances and postpone becoming a lame-duck president for as long as possible, last week's market turbulence drove him to take and anticipate the decision not to run for president. With this announcement, the Frente de Todos (FdT) coalition, in particular the Kirchnerists, are now free to organize their electoral strategy. It is still to be seen if this implies, as projected so far, that several candidates will participate in the primaries or that only one will be announced. The Kirchnerists, especially Cristina Fernández de Kirchner (CFK), are seen eager to nominate only one competitive presidential candidate for the primaries, aligned to their liking, possibly accompanied by a more traditional Peronist vice president. The alleged objective is to avoid the political cost of running against each other in the primaries in a government that has already suffered significant internal friction over the past years. This said, on Thursday, CFK will give a speech in memory of the 20 years since Nestor Kirchner became president. This could be an appropriate moment for her to further clarify the role she expects to play in the upcoming elections.
Last week's depreciation of the peso was strong, and while there might always be short-term reversal, the overall trend of the Trade Weighted Real Exchange Rate (TWRER) does not seem to be that of appreciation. Also, special attention should be paid to this week's possible announcements from CFK on her political ambitions.
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