Argentina devalues currency as markets slide after presidential vote

Javier Milei, a libertarian who has promised to burn down the central bank, took a third of the votes in Sunday’s primary. Picture: AP/Natacha Pisarenko

Outsider economist Javier Milei’s surprise win in Argentina’s presidential primaries sent markets tumbling and forced the government to devalue the peso currency by 18% after suffering a heavy electoral defeat.

The central bank also stepped in, raising interest rates  to 118% from the current 98%.

The Argentinian stock market got hammered, with the local Merval index down as much as 14% in dollar terms, in heavy trading. Mr Milei, a libertarian who has promised to burn down the central bank, took a third of the votes in Sunday’s primary. 

Hardliner Patricia Bullrich won the nomination for the main market-friendly opposition party bloc, which came in second, trailed by economy minister Sergio Massa representing the incumbent Peronists.

With a tight three-way race unlikely to be settled in the October 22 vote, investors are bracing for more uncertainty as the election will almost assuredly go to a second round in November. 

From ditching the struggling peso to eventually eliminating Argentina’s central bank, Mr Milei has vowed to implement a series of bold — and perhaps unfeasible — measures to pull South America’s second-largest economy from the brink of a meltdown.

While some of his proposals have scared off investors, his fiery rhetoric has resonated with many Argentines. They say Argentina’s situation is so messy that it will take a leader as energetic as Mr Milei to change it. 

Bloomberg