- The Argentine peso was down more than 1% against the dollar on Tuesday.
- Sweeping austerity measures and a $50 billion credit line have failed to prop up the currency.
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Argentina's currency continues to slide despite the world's highest interest rates and a $50 billion IMF bailout
The Argentine peso continued to slide Tuesday, even after officials stepped up efforts to support a historic International Monetary Fund credit line that had been extended to the country earlier this year amid a spiraling economic crisis.
The Argentine peso continued to slide Tuesday, even after officials stepped up efforts to support a historic International Monetary Fund credit line that had been extended to the country earlier this year amid a spiraling economic crisis.
Even a central bank rate hike to 60% last month has failed to prop up the currency.
"The worsening of the situation in Argentina despite the rate hikes and government efforts to restore market confidence confirms our view that the situation is far from being solved," Nomura analysts led by Craig Chan wrote in a note.
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The government has been in talks with the International Monetary Fund to speed up measures to stem the crisis. As part of a historic bailout deal reached in June, the IMF has so far extended $15 billion to the country and was expected to disburse an additional $3 billion in September.
Analysts are concerned IMF stipulations like austerity measures could spark political backlash in Buenos Aires. President Mauricio Macri and , including stiff spending cuts and export tax increases.
Those measures could deliver a political blow to the conservative president, who campaigned on a free-market platform, ahead of October 2019 elections. His approval rating has already been on the rocks, dipping below 40% earlier this year.
"We expect markets to remain unnerved by the possibility that he may not be re-elected next year – a situation that could put the current macroeconomic adjustment program in jeopardy," Chan wrote.
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