Argentina markets face hangover after far-right vote win
By Eliana Raszewski and Jorgelina do Rosario
BUENOS AIRES/LONDON (Reuters) -Argentina's markets face an election hangover on Monday after a shock primary vote win for far-right libertarian Javier Milei — who wants to axe the central bank and dollarize the economy — shook up the race towards presidential elections in October.
Rock-singing, wild-haired economist and lawmaker Milei far outperformed forecasts to win some 30% of the vote, the largest share with over 90% of ballots counted.
The primary to elect party candidates acts as a dress rehearsal for the general election in two months' time.
Markets were betting on a strong performance by more moderate candidates, who had a bad night. That could weaken the peso currency in popular parallel markets on Monday and weigh on bonds which have risen in recent weeks.
Investment bank JPMorgan (NYSE:JPM) projected «mounting pressure on the exchange rate, resulting in a widening gap between the parallel and official exchange rate,» according to a note led by analyst Diego Pereira. The official exchange rate stands at 287 pesos per dollar, while the free-floating rate is more than double that amount.
The U.S. bank recommended staying «market weight» on Argentina's government bonds as the existing financial landscape «is set to deteriorate further.»
Argentina's markets have long been wobbly with years of economic crisis. After a similar primary election shock result in 2019, bonds and the currency crashed and remain in distressed territory, with the peso now held in check by capital controls the government has been unable to unwind.
Latin America's third-biggest economy has been grappling with a severe economic crisis with sky-high inflation and falling central bank reserves. Gross
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