Argentina's battered peso weakened another 1.34% on Thursday, even after the central bank sold $346 million in reserves to ease its fall three days ahead of a presidential election that has increased uncertainty over the inflation-racked economy.
The peso slid to end the day at 59.80 per dollar. It has shed 84% of its value since the inauguration in late 2015 of President Mauricio Macri, an advocate of open markets who has failed to solve Argentina's long-standing economic problems.
Macri is expected to lose Sunday's vote to populist-leaning Peronist Alberto Fernandez. Polls show Fernandez could win outright, avoiding a November second-round vote.
"The central bank is intervening, basically trying to get to the election with a mixture of not losing too much in reserves while maintaining a foreign exchange rate that is not too restless," said economist Martin Kalos with consultancy Elypsis.
Business leaders and investors welcomed Macri's election four years ago, but his orthodox policies have not healed Latin America's No. 3 economy. Economic activity shrank 3.8% in August from a year earlier, government data showed on Thursday.
Inflation is at 53.5%.
The presidential front-runner's running mate is Cristina Fernandez de Kirchner, a populist icon who implemented heavy trade and currency controls during her two terms ending in 2015.
Alberto Fernandez says he would be firmly in charge if elected, although some investors and average Argentines say they suspect the former president would play an outsized role.
"There is a lack of confidence in Alberto Fernandez's promises. And I believe it would take him a long time to gain it," said Gabriel Zelpo, director of economic consultancy Seido.
Macri was elected on promises of "normalizing" an economy distorted by Fernandez de Kirchner's market interventions. But he overestimated his ability to attract investment and underestimated the inflationary impact of his fiscal policies.
These included cuts in public utility subsidies that boosted electricity and heating bills for businesses, which in turn hiked prices for the goods and services they sold. Inflation took off and has yet to moderate. Consumer prices rose 5.9% in September alone.
Widely expected to be sworn in as Argentina's leader in December, Fernandez this week appealed to Macri to take measures to keep the currency stable during the likely upcoming transition of government. The peso tumbled after Fernandez thumped Macri in the Aug. 11 primary election, Argentina's dress rehearsal for the general election.
Since then, the central bank has spent more than $4.5 billion in reserves to prop up the peso, which has nonetheless lost 23.6% against the greenback during the same period.
