Mauricio Macri’s presidency was meant to lead Argentina out of a dismal period of debt defaults, currency controls, and recession. But, as Bloomberg reports, markets show investors are losing faith in the new dawn for South America’s second-largest economy.

Despite all the constant propaganda spewing forth from officials in Argentina (and at The IMF), we leave it to an old friend and veteran EM trader to sums things up: “The Argies are proper f**ked.”

Indeed, judging by today’s market action and headlines, he is right, as despite the promise of a USD 50 billion International Monetary Fund (IMF) bailout (which is now being accelerated), the Argentine peso continues to collapse, inducing the next wave of inflation, and it could shortly usher in the next recession/depression.

With a run on the peso, Argentines and investors are bracing for financial volatility, which judging by the latest declines in emerging-market currencies – it might have already started – as the peso has crashed 8% today to a new record low above 34.0/USD…This is the biggest single-day drop since 2015’s devaluation.

The central bank sold $200 million of its reserves in two currency auctions on Tuesday aimed at stabilizing the peso, which nonetheless weakened to a record close of 31.50 per dollar. Another $300 million were auctioned on Wednesday.

“Over the last week we have seen new expressions of lack of confidence in the markets, specifically over our financing capacity in 2019,” Macri said.

Will Argentina, rather than Turkey, be the first to impose exchange controls which are governmental limitations on the purchase and/or sale of the peso.

USDARS (PESO) SPOT RATE

According to Reuters, economists had pointed out that Argentina’s peso was extremely overvalued, and it seems that the government made the fatal mistake by acknowledging the problem. In April, the peso started its plunge against the dollar, due to investor concerns about the government’s ability to control inflation and the threat of interest rate hikes plus quantitative tightening via the U.S. Federal Reserve, which rapidly strengthened the dollar worldwide.