The results of the second round of Argentina’s presidential election have been announced, with far-right liberal economist Javier Meili winning beyond expectations. He promised to overhaul South America’s second-largest economy, which is struggling to make ends meet. was a blow to the economy andcurrencyThe fate of the peso will have far-reaching consequences.
Bloomberg reported that the vote count showed that Mireille received about 56% of the vote, well ahead of her rival and current Economy Minister Sergio Massa, who received 44%.investIt is believed that such a big lead will make it easier for Mireille to push her policies forward.
Márez, known as “Argentina’s version of Trump”, promised during his campaign to “break the status quo”. His economic policy is to dollarize the Argentine economy, which means abandoning the peso and adopting the US dollar as its currency. He also vowed to cut public spending and close the central bank to curb inflation and strengthen the fiscal balance. These policies are likely to be good news for bond investors who have expected another default in Argentina.
Foreign bonds are currently trading below 30 cents per dollar, but are expected to rise further. Traders are weighing whether the capitulation could reverse policies that have pushed the country into its sixth recession in a decade and pushed inflation to more than 140%.
The peso fell to around $1,000 per dollar on local cryptocurrency exchanges on Sunday. This is down 8% from last Friday’s close of $920 per dollar. Local markets were closed on Monday due to holiday.
If the dollarization policy succeeds, Argentina will enter uncharted territory: never before has such a large country handed over the reins of its monetary policy to policymakers in Washington. However Ecuador and El Salvador have already implemented dollarization in their economies.
In her victory speech on Sunday night, Mireille avoided talking about radical reform measures and instead emphasized the dire economic situation in a low-key manner. “Today is the beginning of the end of Argentina’s decline. We have to start doing what history has shown works. Within 35 years we will be back on the list of world powers,” he said in a speech to supporters outside his campaign headquarters. He did not discuss this issue in his second speech.Central bankBut said it was necessary to “solve the central bank’s problems”.
Patrick Esteruelas, head of research at Amso Asset Management, said: “The votes support the reform, but there are big implementation risks. But with limited support in Congress, it is doubtful whether he can survive politically by making the adjustment. “
Mireille’s La Libertad Avanza party controls only a small number of seats in Congress, and even with broad political support, a policy like dollarization would be an extremely complex undertaking.