Argentina’s peso resumed its slide on Wednesday as President Mauricio Macri announced a raft of emergency measures aimed at providing relief to a population suffering from the impact of a sharp devaluation following his stunning defeat in primary elections.

The measures, which will cost $740m, included increases in the minimum wage, loans for small and medium-sized businesses, student grants, subsidies for poor families with children and a floor for income tax, as well as a freeze on petrol prices for 90 days.

The peso fell more than 5 per cent against the dollar on Wednesday morning to a record low of 58.75 pesos per dollar. The yield on the country’s government bonds climbed again, with one maturing in 2028 rising to 18.4 per cent. Yields move inversely to prices. Longer-dated debt, including the century bond maturing in 2117, failed to catch a bid as well. That once-celebrated issuance is now trading at 48 cents on the dollar.

The sharp move lower in the peso has heightened concerns of a coming debt default, with the odds of such a move within five years remaining elevated at 75 per cent. Four-fifths of the country’s debt is denominated in a foreign currency, meaning any weakness in the currency makes repayments a much more difficult task.

Mr Macri has launched the new measures as he redoubles efforts to win presidential elections in October after losing by 15 percentage points in primary elections on Sunday to his Peronist rival, Alberto Fernández. The outcome took markets by surprise and leading to a collapse in Argentina’s asset prices.

It also fuelled concerns that Mr Macri may be in denial about his election chances, and that the measures will do little to solve a looming governability crisis if the economic chaos worsens and there are no talks with Mr Fernández to smooth a transition, seen now by investors as inevitable.

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“It’s too little, too late,” said Siobhan Morden, head of Latin America fixed income strategy at Amherst Pierpont Securities, arguing that it is “game over” for Mr Macri. “There’s very little that populism can do to change three years of recession. Voters delivered a vote of no confidence in the primaries. I can’t think of anything he could do or say to reverse the electoral outcome.”

Observers doubted whether the measures, which officials insist will not affect the IMF-mandated fiscal targets, would have enough of an impact to change the election result, and saw them as doing little to calm exchange-rate volatility or inflation, along with the deeper reasons behind Mr Macri’s poor electoral performance.

“These are all measures to compensate for the disaster of Monday. There is nothing that will change the reasons behind the disaster of Monday,” tweeted Carlos Rodríguez, a local economist.

Government opponents were even more dismissive. “After insulting us on Monday because we didn’t vote for him, now ne announces a ‘bonus’ of $30 for two months. Clearly he takes us for fools,” tweeted Aníbal Fernández, who replaced Alberto Fernández as cabinet chief under Cristina Fernández de Kirchner.

Mr Macri also apologised for comments on Monday that appeared to blame those who voted for Mr Fernández for the market rout, since investors are fearful of the consequences of a return of Peronism and a potential default on Argentina’s sovereign debt.

“I doubted whether to do it, because I was still very affected by Sunday’s result — also without sleep and sad because of the impact on the economy,” he said, assuring that he “understood” what happened in the primary elections, in which he won just 32.1 per cent, compared to Mr Fernandez’s 47.7 per cent.

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“On Sunday there were many Argentines that believed in the change that we began, but after a very tough year and a half said ‘I can’t take it any more’. They felt that during that time I demanded too much of them,” he said. “It was like climbing Aconcagua and now they are tired, exhausted. Just getting to the end of the month often became an impossible task.”

Via Financial Times