Argentina’s peso dropped again on Tuesday as market turmoil spilled into a second day following opposition candidate Alberto Fernandez’s landslide victory in a primary election that dealt a severe blow to President Mauricio Macri’s re-election chances. The peso lost 9.32% of its value early on Tuesday to reach 59 per US dollar.
The currency had hit an all-time low on Monday of 65 to the dollar, a drop of 30%, on fears that a Fernandez government could take Argentina back to populist economic policies.
In an interview Monday, Fernandez said he was willing to collaborate with the current government after his primary triumph on Sunday sent the peso, stocks and bonds reeling.
Fernandez, who has former President Cristina Fernandez as his running mate, pulled off a stunning upset in the primary with a wider-than-expected 15-point lead over Macri, a free market proponent.
Refinitiv data showed Argentine stocks, bonds and the peso had not recorded the kind of simultaneous fall seen on Monday since the South American country’s 2001 economic crisis and debt default.
While government bonds and stocks showed signs of stabilisation on Tuesday, other data hinted that Argentina’s economy would not bounce back quickly. Argentina’s country risk rose nearly 100 basis points to 1 564, the highest in more than ten years.
The cost of insuring against an Argentine sovereign default jumped again on Tuesday, according to data from HIS Markit. Markit’s calculations price the probability of a sovereign default within the next five years at more than 72%.
The primary results showed Fernandez, a former cabinet chief, was well placed to win October’s general election in the first round. He blamed Macri for the market turmoil.
“The dialogue is open, but I don’t want to lie to Argentines. What can I do? I’m just a candidate, my pen doesn’t sign decrees,” Fernandez said in an interview with Argentine TV channel Net TV, broadcast late on Monday.
Monday’s crash in the peso unnerved emerging market investors, with markets already jittery over the Sino-US trade war.
In the NET TV interview, Fernandez also took aim at Brazilian President Jair Bolsonaro on the same day the right-wing leader warned that his country could see a wave of migrants fleeing Argentina if the presidential election there returns to the leftist policies of the Fernandez ticket.
“In political terms, I have nothing to do with Bolsonaro. I greatly welcome him speaking ill of me. He is a racist, a misogynist, violent,” Fernandez said, while acknowledging that Brazil would always be Argentina’s “main partner.”
Fernandez also said US President Donald Trump is a good leader for his country, but not for the world. Fernandez, regarded as a moderate within the Peronist movement, has proposed an economic and social pact to combat inflation, which is running at 55%.