​More cabinet changes and FX policies

ARGENTINA - In Brief 18 Jun 2018 by Esteban Fernandez Medrano

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This week will be an interesting thermometer to follow the market mood on Argentina. Even more so with tomorrow´s LEBAC auction, ahead of Wednesday’s formal approval of the stand-by agreement by the board of Directors of the IMF. As part of broader economic adjustments, aligned with the IMFstand-by agreement, President Macri decided to implement further changes to his cabinet during the weekend. After the resignation of BCRA president Sturzenegger last Thursday, replaced by former Finance Minister Luis Caputo, Production Minister Francisco Cabrera and Energy Minister Juan José Aranguren were replaced by Dante Sica and Javier Iguacel respectively. While Cabrera was seen as ineffective in his objective of strengthening domestic activity and reverting the lackluster performance of industrial exports, Aranguren suffered the cost of facing a somewhat untidy tariff hike process, added to an investigation on whether he benefited Shell (his former employee) in a gas contract. Both replacements are perceived as more “hands on” Ministers, in terms of market intervention. Dante Sica held the post of Secretary of Industry, Commerce and Mining during 7 months in Duhalde`s transition mandate, with a similar role . His main objective now is to find ways to avoid a domestic recession and spur industrial exports so as to address the trade deficit. He was reported stating that an exchange rate of 28 pesos per dollar is one at which many tradeable sectors feel comfortable. I.e. he will be clearly pleading for a competitive exchange rate, trying to avoid real exchange rate appreciations. Javier Iguacel, up to now head of the National Direction of Roads (Vialidad Nacional) has his origins ...