Panic in the financial markets of Argentina after the defeat of Mauricio Macri

The financial markets reacted in a panic to the possibility that Peronism will return to power in Argentina.

A day after the overwhelming victory of Alberto Fernández in the primary elections the peso and the Buenos Aires Stock Exchange collapsed.

An hour after the opening of the exchange market to buy a dollar it took more than 60 pesos, compared to less than 45 on Friday, about 30% more.

The Argentine Central Bank raised the interest rate to 74% and sold one hundred million dollars in reserves in order to curb the devaluation.

The strategy was partially successful: the US currency ended the day at 55 pesos per unit.

The Stock Exchange did not fare better: in Buenos Aires the Merval index closed with a 37% decline, one of its worst daily falls in history.

Markets support Macri bluntly.

His reaction on Monday was even more virulent than expected after Friday was a day of euphoria after the dissemination of polls that pointed to a minimum triumph of the current president, a scenario far removed from that experienced on Sunday.

The surprising almost 15 points difference between Fernández and Macri, 47% versus 32%, pave the way for the former chief of the Kirchner Cabinet to the presidency.

If the result remained in the generals of October, Fernández would be elected head of state without the need for a second round.

Macri anticipated Sunday night on a Monday that would be complicated.

After acknowledging his defeat, he asked Alberto Fernández to collaborate with governance. “I will do my part, as always; today’s winners will also have their responsibility, ”he said from the Juntos por el Cambio bunker.

The depreciation of the peso was already anticipated from the beginning, when the main banks sold the dollar at more than 50 pesos per unit in their online operations.

But the Argentine currency plummeted once the exchange operations began and in some blackboards it reached 62 pesos.

On Wall Street, Argentine papers also suffered a black Monday, especially those of banks and energy companies.

South American impact

The sharp devaluation of the peso has had an impact on the other regional economies.

The Mexican peso depreciated 0.83%, the Colombian 0.85% and the Chilean 0.41%.

The price of the dollar is of capital importance in the political and economic life of the South American country.

It is the savings currency of the Argentine upper and middle classes and with which they seek to protect themselves against recurrent crises.

Its value greatly influences inflation, not only because of the increase in imported parts and products, but also because factories and businesses quickly raise prices to try to minimize possible losses.

As in recent months, the Central Bank has gone out to sell dollars to curb the devaluation of the currency.

It has not been enough. Macri focused his campaign on fear of the return of Peronismo.

That possibility, very real today, has increased uncertainty and hits an economy that was already in recession.

Carlos Dagorret
CTO Facultad de Ciencias Económicas

My research interests include distributed robotics, mobile computing and programmable matter.

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