Argentine Markets Plunge Following Milei‘s Buenos Aires Electionโข Defeat
Argentineโค financial markets experienced a important downturn on Monday following President Javier Milei’s party’s defeat in the Buenos Airesโข legislative elections over the weekend. The MERVAL,Buenos aires’ main stock index,plummeted โข13.25% to closeโข at 1,732,923.77 points.Together, the Argentine pesoโค sharply devaluedโ against the US dollar.
The peso officially traded at 1,422 per โฃdollar,aโฃ 4.26% increase, bringing the โexchange rate close to the upper limit established โคin argentina’s agreement with the International Monetary Fund (IMF)โข – approximatelyโ 1,468 pesos per dollar.โฃ Should the official rate reach this ceiling, the Centralโค Bank (BCRA) would be requiredโ toโฃ intervene by selling โdollars. The unofficial “blue dollar” โrate, traded on the โฃparallel market, reached 1,385 pesos โคper dollar.
While the market anticipated some negative reaction โto โคMilei’s loss, the magnitude of the decline exceeded expectations. Buenos Aires accounts for 40% of the Argentine electorate, leading investors to become moreโค pessimistic about the government’s performance in the โupcoming October national legislative elections and the future of Milei’s economic reform agenda.JP morgan economists released โขa statement highlighting the concerns, stating, “The forceful defeat of the management Mileiโฃ in the legislative election of term in Buenos Aires has launched serious doubts about his abilityโ to โขobtain a positive result in the upcomingโข national elections and threatens the continuity of his reform agenda. Increased political risk is expanding โฃeconomic vulnerabilityโข andโ complicatingโข Argentina‘s path towards stabilization.”