Four reasons why the US-China fight can affect Argentina

A complicated three-step badtail for Argentina: US tariff escalation, yuan devaluation and
The worsening conflict between Donald Trump and Xi Jinping. Specialists speak of a "very high level of uncertainty" in the world since the beginning of the confrontation, in March 2018, but this increases with each crossing of the two leaders.

"What happened this morning generated a lot of uncertainty, which caused risk aversion and therefore a
flight to quality"says the economist Luis Palma Cané.The English term mentioned by the specialist is a financial phenomenon that occurs when investors sell badets that, in their view, present a higher risk, and buy from them. others that they consider safer.

Next, some of the local variables most exposed to fluctuations in the relationship between the United States and China.

Dollar

For that
fight for qualityEmerging market badets are sold, which puts pressure on the exchange rate. In addition, the relative revaluation of the dollar against the yuan also complicates the relationship between other currencies and the US greenback. The Argentine peso and other currencies in the region depreciated this morning after the Chinese devaluation.

In Argentina, moreover, political uncertainty has been added in the days leading up to PASO, which is already exerting pressure on the exchange rate since the end of July.

L & # 39; inflation

Another term in English explains why the resurgence of conflicts indirectly generates more inflation: this is the
pbad through, or the pbadage of the price devaluation. If the dollar is valued in the country and in the world, imported inputs and dollar costs increase in local currency. This puts additional pressure on channel intermediaries to transfer the exchange rate situation to the prices paid by customers and end consumers.

Finance on hold

In an environment perceived as riskier, "the stock markets of the world in general, and in particular those of emerging countries" are deteriorating, explains Palma Cané. For example, Wall Street opened with a low of 1.89% on the Dow Jones. Around the age of 13, the Merval lost 1.3%.

The main European stock markets have opened down. At the beginning of operations, the FTSE-100 index of the London Stock Exchange lost 1.10%, the DAX in Frankfurt lost 0.71% and the CAC-40 in Paris 1.17%. In Madrid, the Ibex-35 started down 1%.

Goods in difficulty

"Product prices are falling [en relación con el dólar], which complicates exports, "says the economist.The world's leading seller is the agri-food, where stand out products such as soy and wheat.In the medium term, if the conflict continues to intensify, it exacerbate a global slowdown "that could reduce the level of foreign trade and limit the demand for Argentine products.

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