Even a central bank rate hike to 60% last month has failed to prop up the currency. The peso, which has shed about half of its value this year and is the worst-performing currency of 2018, was down 1.3% to 37.9500 against the dollar around noon ET.
"The worsening of the situation in Argentina despite the rate hikes and government efforts to restore market confidence confirms our view that the situation is far from being solved," Nomura analysts led by Craig Chan wrote in a note.
The government has been in talks with the International Monetary Fund to speed up measures to stem the crisis. As part of a historic bailout deal reached in June, the IMF has so far extended $15 billion to the country and was expected to disburse an additional $3 billion in September.
Analysts are concerned IMF stipulations like austerity measures could spark political backlash in Buenos Aires. President Mauricio Macri and Finance Minister Nicolas Dujovne rolled out sweeping economic reforms last week, including stiff spending cuts and export tax increases.
Those measures could deliver a political blow to the conservative president, who campaigned on a free-market platform, ahead of October 2019 elections. His approval rating has already been on the rocks, dipping below 40% earlier this year.
"We expect markets to remain unnerved by the possibility that he may not be re-elected next year – a situation that could put the current macroeconomic adjustment program in jeopardy," Chan wrote.
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