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Argentine peso collapses as primary suggests return to interventionist economics

Argentine peso collapses as primary suggests return to interventionist economics”

"This is an election where Argentina has to determine whether it continues on a path of transformation, of deepening democracy, of insertion into the world, of improvement and development - or returns to an authoritarian populist model that has failed in all places where it has been implemented", he said.

Duhalde then the boss of the crucial province of Buenos Aires with 37% of the electoral roll, somehow managed to lead Argentina out of the chaos when the 2002/03 default and melting of the economy which contracted over 25%, picked the Kirchners to lead the country.

"Given the narrow path ahead, our view is that a high degree of policy continuity is a must in order to maintain macro stability", Morgan Stanley said in a research note. He has proposed an economic and social pact to combat inflation, which is running at 55 per cent. If no candidate wins outright in October, there will be a November runoff. "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.

The sell-off is a sample of what Argentines can expect should Fernandez be confirmed as the country's next president, Macri said, adding he won't make changes to his Cabinet now.

While Argentine assets are expected to remain pressured for the near future, UBS's Czerwonko agrees with some analysts who say the fear of contagion to other Latin American markets and broader emerging markets remains low as Argentina's issues are "self-inflicted and very idiosyncratic".

It is "completely feasible" for the peso to drop to as low as 70 per USA dollar, Glossop said.

Concerns among market participant stem from possible policy discontinuity and intervention as experienced earlier under Kirchner's government. An IMF delegation is flying to Argentina supposedly to meet government officials and representatives of the winning opposition "Frente de Todos", (Everybody's Front).

The former president nationalised pension funds, imposed currency controls and tampered with economic statistics during her presidency between 2007 and 2015.

Voters were given a stark choice: stay the course of painful austerity measures under Macri or a return to interventionist economics under the Peronists. 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 worldwide capital markets.

Szabo did add however that they were still above the 40 cents level that would truly reflect a fully fledged default.

More than 75 percent of Argentina's over 33,800,000 eligible voters turned out to vote on Sunday.

Macri's election in 2015 marked the first time in a more than a decade that Argentina's centre-right opposition had unseated the centre-left Peronist movement to which Cristina Fernandez belongs.



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