Left Menu
Development News Edition

Argentine peso crashes after Macri gets thumped in primary election

Reuters | Buenos Aires | Updated: 12-08-2019 19:36 IST | Created: 12-08-2019 19:33 IST
Argentine peso crashes after Macri gets thumped in primary election
Image Credit: kremlin.ru

Argentina's beleaguered peso currency collapsed 30.3% to record 65 per U.S. dollar on Monday, traders said, after market-friendly President Mauricio Macri's worse-than-expected performance in the country's Sunday primary election. Bonds and shares were also expected to fall after opposition candidate Alberto Fernandez - whose running mate is former president Cristina Fernandez de Kirchner - dominated the primary by a wider-than-expected 15.5 percentage point margin.

The result cast serious doubt on Macri's chances of re-election for a second term in elections in October, analysts said. Bank of America Merrill Lynch analysts said the scale of the Fernandez win was much more extreme than their "bear case" scenario. "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's lead far exceeded the margin of 2-8 percentage points forecast in recent opinion polls. "Markets react badly when they realize they were scammed. We are living a fictitious economy and the government is not giving answers," Fernandez said in a radio interview Monday morning.

Argentina is in recession with inflation at over 55% after more than three years of Macri's policies. Investors nonetheless see the Fernandez/Kirchner duo as a riskier prospect than free-markets advocate Macri. Kirchner imposed strict currency controls that slammed investment during her 2007-2015 administration. She feuded with the country's key farm sector over export taxes and presided over a multi-year standoff with bondholders that kept Argentina locked out of the international capital markets.

"Macri has already implemented a number of short term measures to try and shore up support ahead of the October vote. Additional promises can be made, but the gap he needs to make up is a very wide one," Ilya Gofshteyn, senior emerging markets The comprehensive victory by Peronists Fernandez and Kirchner "paves the way for the return to left-wing populism that many investors fear," consultancy Capital Economics said in a note to clients.

"With a renewed focus on sovereign default risks, bonds, equities, and the peso will come under severe pressure in the coming days. That said, falls in the currency might be tempered by intervention in the foreign exchange market," it said. The primary result indicated that Fernandez had enough support to clinch the presidency in October's first round, without having to go to a November run-off election.

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


TRENDING

OPINION / BLOG / INTERVIEW

Pandemic must be impetus, not obstacle, for clean water access

To make matters worse, there are suspicions that the inadequacy of wastewater treatment methods in California, the rest of the USA, and indeed around the world may help to propagate the disease even more widely. ...

3D printing and the future of manufacturing post COVID-19

The on-demand, customizable, and localized manufacturing of product components facilitated by 3D printing has the potential to redefine manufacturing but there are certain technical, mechanical, and legal limitations that, unless ...

How UK’s 'best prepared' healthcare system failed to gauge COVID-19

The UK is proud of their public health system and its unlike any other country as around 90 percent of British public supports the founding principles of National Health Service. But without accurate data being available to stakeholders in ...

Poor on IHR capacity progress in 2019, WHO says Cambodia tops COVID-19 response

Despite being in proximity to Hubei, the original epicenter of COVID-19 pandemic, Cambodia has reported just 226 confirmed cases and zero deaths. After seeing the data, WHO appreciated Cambodias healthcare information system but experts dou...

Videos

Latest News

19 Indians stranded in Comoroas board flight for India

As many as 19 Indians citizens, who were stranded in Comoros, boarded a specially chartered flight to Tanzania on Sunday. They will join other stranded Indians in Tanzania on the flight back to India tomorrow. 19 Indian citizens stranded in...

UPSC topper Pradeep Singh Malik meets Haryana CM

UPSC civil services exam topper Pradeep Singh Malik on Sunday met Haryana Chief Minister Manohar Lal Khattar, who congratulated him and said that his achievement would inspire other youths of the country. Malik along with his father Sukhb...

PMO announces Rs 2 lakh ex-gratia for kin of those killed in Vijayawada fire

The Prime Ministers office on Sunday announced an ex-gratia of Rs 2 lakh each to the kin of those who lost their lives in the fire at the COVID centre in Andhra Pradeshs Vijayawada. Apart from this, a sum of Rs 50,000 each would be given to...

CISF official asked if I am Indian as I don't know Hindi: DMK MP Kanimozhi

DMK MP Kanimozhi on Sunday alleged that a CISF official asked her if she was an Indian as she could not speak Hindi, while the paramilitary force ordered an enquiry asserting that it is not its policy to insist upon any particular language....

Give Feedback