Argentina Election Surprise: In a surprising twist, Argentina’s ruling Peronist party clinched the top spot in the general election, quelling market concerns about a potential win for libertarian radical Javier Milei, who vowed to dollarize the economy and close the central bank.
Peronist Economy Minister Sergio Massa secured approximately 36.5% of the vote, surpassing right-wing outsider Milei, who garnered just over 30%. This outcome, defying pre-election polls, sets the stage for a polarized run-off vote between the two candidates on November 19.
Market analysts view this result as a relief, as it should ease fears of a sudden peso devaluation and diminish the likelihood of the country abandoning its currency anytime soon. The eventual winner is expected to have a weak mandate, which could prevent drastic policy shifts.
Analyst Salvador Vielli commented, “It seems to me that it can alleviate the flight to dollars.” He noted that many assets had priced in the possibility of disorderly dollarization, so the dollar may stabilize. While there might be increased intervention in the bond market, Vielli doesn’t anticipate significant market movements.
Argentina’s peso has experienced volatility leading up to the election, with the dollar trading at nearly 1,000 pesos in unofficial parallel markets, while the official exchange rate remains tightly controlled at 350 pesos.
Also Read: Argentina Economic Crossroads: Debt Crisis and Currency Dilemma
Despite the country facing its worst economic crisis in two decades, with soaring inflation and mounting debts, there is cautious optimism among market operators. A local trader, who chose to remain anonymous, believes Massa’s victory won’t trigger a mass sell-off of Argentine assets, as most market participants anticipated the election results.
The “crypto dollar” showed signs of strengthening in parallel exchange rates, which are far from the official rate.
The outcome also means that Patricia Bullrich, the establishment candidate favored by businesses, drops out of the race, leaving Massa and Milei in a close battle.
Roberto Geretto of Fundcorp pointed out the dual negative aspects for the market: the elimination of “Together for Change” and ongoing political uncertainty. Investors will be watching for speeches, political alignments, and economic measures.
Sebastián Azumendi of Adcap noted that investors had been apprehensive, particularly about Milei, and the result eases concerns about radical policy changes. He anticipates a slight market dip at the opening but believes there will be a demand floor.
In summary, Argentina’s election outcome has provided some stability and reduced market anxieties, despite the country’s significant economic challenges.
Our Reader’s Queries
Who is the new President of Argentina 2023?
On November 19, 2023, Javier Milei, a 53-year-old right-wing populist, was elected as Argentina’s new president in a run-off election.
Is Argentina a democracy or dictatorship?
Argentina’s government structure is based on democracy, which comprises three branches of government.
Who is the libertarian candidate in Argentina?
In 2020, Argentine libertarian Javier Milei made a bold move by entering politics with the intention of “blowing up” the system. Despite initial skepticism, the wild-haired economist and former TV pundit has managed to achieve the unexpected – he’s become the country’s president. Milei’s unconventional approach to politics has clearly resonated with the people, propelling him to the highest office in the land.
Does Argentina have fair elections?
Argentina operates as a federal constitutional republic. In the recent elections held in October 2019, Alberto Fernández was elected as the new president. The elections were deemed to be generally free and fair by both local and international observers.