He electoral and political scene crosses a panorama of vagueness after the unexpected result of the primary elections(STEP) last Sunday, in which javier milei was positioned as the most voted candidate. Closely related, the economy is also determined by a climate of uncertaintylinked to political disorder, but also marked by the low level of Bookings and the high inflation.
In the previous one, based mainly on the polls, public opinion and specialized analysts pointed to a victory for Together for Change. However, the landscape changed: miley appeared leading on a stage of practically triple draw.
The first and most notable economic impact that the verdict at the polls had on the economy was the decision, taken on the Monday after the elections, by which the Central Bank (BCRA) raised the official exchange rate to $350 until the next election day, which will be the October 22.
Another of the effects of last Sunday’s result was the collapsein the first days of the week, of the dollar bonds. “The immediate reaction of the market was forceful: those hard currency debt instruments dropped 11% in NY since Friday, while the CCL free up 24%“.
How did the market receive the electoral results?
According to the weekly report of the consultant 1816 there is three axes that serve to understand the impact it generated the verdict of the citizens by positioning as the most voted candidate javier milei:
I am suspicious of Milei despite her pro-market profile
They explain that if, given a clearly positive result for the Liberal candidate, the market reacted with a strong collapse of dollar bonds, it can be inferred that his triumph generated concern. “We do not know, at the moment, if the markets reject Milei’s plans either if it’s just fear of the unknown”they clarify.
However, in the English-speaking trade press he was labeled a “populist” and a “far-right outsider”, so it is not surprising that the initial reaction was negative.
Doubts about the viability of your proposals
javier milei was in charge of installing that, in the case of reaching the government, he would seek dollarize the economy or implement a fiscal adjustment “tougher than that of the IMF”. From the consultancy 1816, they maintain that investors doubt the ability to carry out these plans, in a framework marked by the current poverty levelwith negative reserves and high level of remunerated liabilities of the BCRA.
Another indicator that complicates the candidate’s prospects for Freedom Advances (LLA) in relation to whether it will be able to implement the promised measures, it is the number of seats you could have in it Legislative power. In the case of repeating the result of the PASO in the first electoral round, the liberal force would have the fifteen% of the deputies and the eleven% of the senatorswhich could be constituted as a major obstacle.
A Peronist government is still a possibility
“The base scenario of the market facing Sunday was a clear victory of JvC over UxP”, they explained from the consultant. However, the difference between Together for Change and Union for the Fatherland turned out to be from 1%. In fact, as there is so little distance between one force and the other, it still remains to be defined which one will face LLA in a possible second round. “This additional uncertainty may weigh on investors”they maintain.
Source: Ambito
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