Weight, titles and scholarships fall after Milei’s defeat in legislative elections in Buenos Aires

Milei’s party is defeated in Legislative Election in the province of Buenos Aires, Argentina’s financial markets recorded a strong fall on Monday (8), after the defeat of the Javier Milei government in the Legislative Elections in the important province of Buenos Aires, just before the national medium-sized election. The defeat, considered more significant than expected, immediately affected local assets: shares plummeted more than 13% at the beginning of the trading session, while public debt securities retreated more than 6% before the official opening. At 10:40 am, for the time of Brasilia, the S&P Merval index was a drop of 11.5% on the Buenos Aires stock market, while the Argentine weight devalued 5.14%, being negotiated at 1,440 per dollar. The Argentine currency also reached the lowest historical value, which led President Milei to convene his cabinet to urgently discuss the crisis. “These results seem to increase the likelihood of a low central scenario, in which the market questions the likelihood of continuous reforms and uncertainty about future sources of external financing increases,” Morgan Stanley told clients in a note. According to market operators, the focus is now at the level of 1,464 per dollar, considered the upper limit of the defined floating range since the Central Bank (BCRA) suspended currency restrictions in mid -April. Milei admitted the defeat, reaffirmed his commitment to current economic policy, but signaled possible political adjustments to the October national elections. The difference of 13.7 percentage points in the province, traditional bastion of the Peronian party, was seen as unexpected. “With the outcome of the elections, the government is more likely to stay firm rather than change the cabinet or policies. Therefore, expect more interventions in the dollar and rates. The transition to October promises to be turbulent,” said Roberto Manalist of ADCAP. “Although changing the direction of the economy is not easy, remaining in the same situation has its costs, where the government will probably have to use more reserves and interest rates. After the storm, yesterday’s result (Sunday) means that after October there is a great chance of a change in monetary and currency policy.” Milei announced package of measures to try to increase the circulation of dollars in the Argentine economy Agustin Limarian/Reuters

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