Ael ruling suffered a larger setback than the market in the province of Buenos Aires. In the City they hope that this Monday the dollar will start with firm bull pressure, that the bonds deepen the falls and that the country risk is consolidated above 900 points. The Government faces a critical week, in addition, with debt tender, and a market that requires “reset” of economic policy.
The overwhelming electoral defeat of Libertad advances (LLA) in the legislative of the province of Buenos Aires, at the hands of Peronism, leaves for this Monday a Complex financial scenario, with immediate strong tension for the dollar and Argentine assets. Prior to the opening of markets, The City anticipates an important exchange pressure, strong fall of bonds and actions, and a country risk, long above 900 basic points. The government faces a critical week, also marked by a key debt tender, and a market that requires “reset” of economic policy.
With most of the scrutinized province, Fuerza Patria obtained about 47%, while LLA reaches almost 34%. Against consensus, the ruling party lost in all districts, with a particularly weak performance in the 1st electoral section. In the 3rd section, the difference was extended to more than 25% against him.
The first reaction was already observed on the night of the Dague in the Crypto dollarthe exchange rate that does not sleep, which operated in the $ 1,473, exceeding the ceiling of the flotation band ($ 1,470), According to the median of the local exchanges, which reports Coinmonitor. It is a jump of almost 4.5% or $ 63, compared to 24 hours ago. That level, above the roof of the band, would enable the sales of the Central Bank (if the official wholesale exchange rate reaches that level, which closed on Friday at $ 1,355).
In the market they already estimate that the magnitude of the defeat of Lla on Buenos Aires soil will force immediate correction in financial assets, given that The electoral result was not put in prices (It was expected, in the worst case, a defeat for 5 points for the ruling).
But the first official difference is around 13 points (46.94% vs. 33.86%) which, in the market anticipates a Opening with strong tension: a dollar quickly looking for the band’s roof and eventual interventions of the Treasury or Central Bank to try to contain the damage, according to operators consulted by scope.
“We consider that these results probably generate a negative surprise in markets. Exchange rates in crypto markets already reflect tension”they held from Adcap.
The attention now focuses on the speech of President Javier Milei. Within that framework, in the City not only the political coup worries, but also the lack of clarity on how the government will react: “It does not always move with rationality in these scenarios,” He slid a banker. Within that framework, a “black Monday” is discounted at the opening, beyond some analysts note that the macro fundamental ones could contribute a certain support, such as fiscal surplus and an exchange rate that, to reach the band’s roof, could even improve competitiveness.
“The Government – already criticized by several initial exchange and monetary policy errors – faces its first size crisis,” they say from ADCAP. In that sense, speculation about possible changes in the cabinet and new measures that could be announced on Monday morning grow, they comment at the City. The administration would be evaluating a wide range of policy options to face this situation.
The unknown goes through politics: how the ruling will process a defeat of this magnitude and what signs will send to the market in the previous opening of the market for this Monday. In that field, The exchange policy could be the first to recalibrate. The electoral result subtracts political capital to the government to sustain the current scheme, based on sales of foreign exchange, record lace and real rates in historical maximums.
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Source: Ambito
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