Sunday, 15 December, 2019

Argentine peso crashes after Macri gets thumped in primary election

Frente de Todos political party Argentina's former President Cristina Fernandez prepares to cast her vote during primary elections in Rio Gallegos Argentina Sunday Aug. 11 2019. Argentina is holding primaries elec Argentine peso crashes after Macri gets thumped in primary election
Deanna Wagner | 13 August, 2019, 17:44

But many in Argentina have a negative view of the International Monetary Fund and austerity policies, which they blamed for the country's worst economic crisis in 2001.

The Merval index, the country's most important, dropped 37.93% to 27,530.80 points, or 48% in dollar terms, the worst daily performance in 18 years.

Although Macri, who belongs to the center-right Republican Proposal party, was not expected to do well in Monday's primary, populist Alberto Fernández and his running mate, ex-president Christina Kirchner, scored 15 points higher in their primary for Citizen's Unity.

The possible election of Fernandez would reportedly mean a switch to left-of-centre policies that are popular with the majority of voters, but also risk exacerbating what is already record high inflation. "We expect a significant sell-off in EXD (hard currency) assets and heavy pressure in ARS (Argentine peso) with a potential devaluation in coming weeks", they said in a note.

Fernandez had tapped into the public's anger at the economic pain austerity has inflicted.

In order to win the presidency outright in October, a candidate needs at least 45 per cent of the vote or 40 per cent and a difference of 10 percentage points over the second-place candidate.

Given that all of the recession-hit South American country's major parties have already chosen their presidential candidates, the primaries effectively served as a nationwide pre-election opinion poll.

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Despite Macri's struggles to turn the economy round, investors see the Fernandez ticket as a riskier prospect. She fought with the farm sector over export taxes and presided over a multi-year standoff with bondholders that kept Argentina locked out of the global capital markets.

Macri has struggled to maintain voter support in the face of increased poverty and unemployment. Visit MarketWatch.com for more information on this news.

At the time, his victory appeared to signal a clear end to his rival's rule, but he conceded that Sunday's results put him on the defensive.

"We've suffered a bad election", right-wing Macri said Sunday night, but vowed to "redouble" his efforts to secure the "real" elections in October.

"We will reverse yesterday's bad result and we will have a closer election" in the October 27 first round, Macri said, flaked by vice presidential candidate Miguel Angel Pichetto.

But even by its standards, this market meltdown is unprecedented. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.