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\n<\/div>\nRenewed market volatility in\u00a0Argentina<\/span>\u00a0could spark another currency crisis, analysts have told CNBC, as the recession-hit country prepares for presidential elections toward the end of the year.<\/span><\/span><\/p>\n The popularity of President Mauricio Macri has taken a substantial hit in recent months, with rampant inflation, austerity measures and rising poverty rates all threatening to derail the pro-market candidate\u2019s re-election campaign.<\/span><\/span><\/p>\n <\/p>\n The Argentine peso settled at $43.68 on Monday, recovering slightly after falling to a closing record low of $43.97 on Friday. It is \u2014 by some distance \u2014 the world\u2019s worst-performing currency so far this year.<\/span><\/span><\/p>\n \u201cIn Argentina, they are super-sensitive to any shift in the peso \u2014 more than any other country I can think of. They look at the peso as a guide for the economy and so, politically, it is really important,\u201d Fiona Mackie, regional director for Latin America at the Economist Intelligence Unit (EIU), told CNBC via telephone.<\/span><\/span><\/p>\n <\/p>\n \u201cWe shouldn\u2019t see a dramatic overshooting of the peso like\u00a0we saw in August last year\u00a0but, having said that, there is a risk of renewed volatility at any moment,\u201d Mackie said.<\/span><\/span><\/span><\/p>\n Purchasing power<\/span><\/span><\/b><\/span><\/p>\n Market participants are increasingly concerned about Latin America\u2019s third-largest economy, with benchmark interest rates now more than 66% and annualized inflation running at over 50%.<\/span><\/span><\/p>\n Growth indicators for Argentina remain weak. The economy shrank more than 6% in the final three months of 2018, while official data published late last month showed the poverty rate had climbed to 32%.<\/span><\/span><\/p>\n <\/p>\n \u201cBoth the government and the central bank are worried about another currency crisis before the election,\u201d Carlos de Sousa, a senior economist at Oxford Economics, told CNBC via telephone.<\/span><\/span><\/p>\n Macri has been pushing austerity measures to meet obligations under the International Monetary Fund\u2019s (IMF<\/span>) $56.3 billion standby financing agreement that Argentina secured late last year.<\/span><\/span><\/p>\n The historic bailout deal requires the government to ease its primary fiscal deficit. But, many voters are unhappy with Macri for imposing utility subsidy cuts as part of that fiscal effort.<\/span><\/span><\/p>\n <\/p>\n \u201cThe most important thing for Macri is a change in economic expectations. If people feel they are nearly out of the woods and things are going to get better, then this is going to help the government,\u201d de Sousa said.<\/span><\/span><\/p>\n \u201cBut, the problem is there is absolutely no way that by October 27, people will have a higher purchasing power when compared to the same time a year earlier \u2014 no matter how optimistic you want to be about it,\u201d he added.<\/span><\/span><\/p>\n \u2018All bets are off\u2019 if Fernandez wins<\/span><\/span><\/b><\/span><\/p>\n <\/p>\n Financial markets rejoiced in 2015, when Macri was elected on promises that his orthodox policies would attract waves of foreign investment. His election came after eight years of free-spending populism under outgoing President Cristina Fernandez.<\/span><\/span><\/p>\n But, four years later, the latest opinion polls reportedly show Macri and Fernandez running neck-and-neck.<\/span><\/span><\/p>\n Market participants fear the fate of the IMF\u2019s massive bailout package could rest on the outcome of Macri\u2019s election campaign.<\/span><\/span><\/p>\n \u201cWe view the chances of Argentina continuing with some form of the IMF bailout package after the election as likely. But, if Cristina Fernandez wins, all bets are off,\u201d the EIU\u2019s Mackie said.<\/span><\/span><\/p>\n<\/div>\n