Macri's austerity policies prove costly in the primaries

Elias Hubbard
August 14, 2019

With 84 percent of ballots counted, Alberto Fernández had 47 percent of votes versus 32 percent for Macri.

The election result had earlier prompted Argentina's Euro-denominated bond to fall nearly 9% lower, and the main Argentine stock market moved lower by 11% shortly after trading opened.

The result of the primaries, seen by many as a key gauge for the first round of Argentina's presidential elections on October 27, is thought to be a clear signal that the country is ready to reject the ruling government's austere economic policies, which have been supported by a record stand/by loan of US$ 57 billion. Otherwise, a presidential runoff will be introduced on November 24.

Taking note of the voters' discontent over Macri's government shown in the primary elections held on Sunday, Interior Minister Rogelio Frigerio said "the message from the polls was overwhelming" while congratulating "the winners of the primary elections" on Monday.

The currency had hit an all-time low on Monday of 65 to the dollar, a drop of 30 per cent, on fears that a Fernandez government could take Argentina back to interventionist economic policies.

To be elected president in the first round, candidates need to finish with at least 45% of the votes or have 40% and a greater than 10-point advantage over the nearest rival. "Argentinians realized we are the change not them", Fernandez said during his victory speech in Buenos Aires, promising "to end this time of lies and give a new horizon". Trading of the United States dollar opened in Buenos Aires markets at 59 Pesos to the dollar, but rapidly climbed to 65 Pesos and closed at 58 Pesos.

Ms Kirchner said: "We know of the hard moment that the country is going through, of millions of Argentines who have lost their jobs, we have talked with so many, we know what it is".

Alberto and Cristina Fernandez, who are not related despite sharing the same surname, have blamed Macri for a rise in poverty and unemployment. "This gives us the responsibility that we have to reach everyone to give them absolute peace of mind", she said. She now faces multiple corruption probes. She denies the allegations.

"But not only because we won an election - This is not a soccer game". Two exchange-traded funds that track Argentina's stocks fell more than 20%.

The possibility that Cristina Fernandez could return to power put markets on edge. "However, the last thing global markets want to see is another market-friendly government fall to populism and/or geopolitics", said Rabobank strategist Michael Every.

Right-wing Brazilian President Jair Bolsonaro warned that his country could see a wave of migrants fleeing Argentina if Fernandez wins the presidential election.

A number of banks, including Banco Galicia, BBVA, Banco Ciudad and others, already reportedly lowered peso's exchange rate by 10 percent from Sunday to above 50 Argentine pesos per $1.

Other reports by Click Lancashire

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