The investment bank warned that an overwhelming result of the ruling party in the province of Buenos Aires could increase uncertainty.
After the elections in the province of Buenos Aires, it is important to note that the American investment bank JP Morgan drew two possible scenarios for the day after the elections. Among them, one stressed that, although he considered it less likely, would have particularly sensitive consequences for the economy: a forceful victory of Peronism.
According to the report, a broad triumph of the provincial ruling as it was in this case, would generate Greater political tensions nationwide In the relationship with the opposition, right in the prelude to the October legislative elections. That climate, they warn, could translate into a direct effect on Exchange and financial market expectations.
Javier Milei Closing Moreno
The entity provided that, in this scenario, the pressure on the dollar would be deepened. To avoid a messy jump of the official exchange rate, the Central Bank of the Argentine Republic (BCRA) He would be forced to redouble his intervention in the single and free market (Mulc), which would accelerate the deterioration of international reserves. This greatest exchange control effort, in a context of growing volatility, would put more tensions about monetary policy.
In parallel, JP Morgan estimated that the initial reaction of the markets would be to demand higher interest rates as compensation for the increase in political risk. This hardening of financial conditions, they warn, could affect the Economic activity in the short term and complicate the possibility of recovery towards the end of the year.
The institution also pointed out that, with a victory devastating Peronism in the most populous province in the country, the perception of Fiscal risks and of governance, in a context where the ruling party already faces questions about the alleged boundaries in the National Disability Agency (Andis).
Source: Ambito
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