Published: Tue, August 13, 2019

Argentina opposition scores big primary win, hurting Macri's re-election bid

Argentina opposition scores big primary win, hurting Macri's re-election bid

Pro-business President Mauricio Macri predicted worse would follow after Argentina's peso and the Buenos Aires stock exchange plummeted Monday following his crushing defeat by populist candidate Alberto Fernandez in a party primary election.

CENTRE-LEFT presidential candidate Alberto Fernandez promised to build a "new Argentina" after he and running mate Cristina Kirchner stormed to victory in the country's primary elections last night.

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.

Some 33 million Argentines are eligible to cast the compulsory vote, which will go on to a December runoff if none of the presidential candidates wins either 45% of votes or 40% with 10 points over the runner-up in the first round.

The Argentine peso sold off sharply on August 12, trading at about 57 to the dollar at 9:50 a.m. EDT, 20% weaker than on August 9. He said it was "completely feasible" for the peso to drop to as low as 70 per USA dollar.

The markets have little faith in Fernandez, who is widely seen as dependent on Kirchner, but that made scant difference to voters.

According to Reuters, Fernández has said he wants to "rework" the country's International Monetary Fund agreement if he wins the general election.

"Another sharp and sustained episode of financial volatility that interrupts the recent downward trend in inflation, improvement in confidence and recovery in economic activity could increase voter frustration with Macri and lead his support to erode from current levels". "We are living a fictitious economy and the government is not giving answers", Fernandez said in a radio interview on Monday morning.

The primary marked the first chance voters have had to register their preference in a high-stakes presidential race between staying the course of painful austerity measures under Mr. Macri or a return to interventionist economics.

Cristina Fernandez is now facing a series of trials for corruption during her 2007-2015 administration. 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.

However, Fernande added that he doesn't want to default on the country's debt.

However, unemployment and poverty have risen. One of the risks to his support was newly impoverished Argentines who were more energized to vote to punish him at the polls, political analysts said.

But the Buenos Aires stock exchange shot up eight percent on Friday amid expectation that Macri would do well in Sunday's vote.

He told supporters on Sunday the primary vote was a "bad election" for his coalition ahead of the official results.

But even by its standards, this market meltdown is unprecedented.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. This article is strictly for informational purposes only. 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.

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