All three polls indicate that libertarian Javier Milei will win over Sergio Massa, and economy minister in the current Peronist government. There is a significant undecided component. Milei has said he will abolish the central bank and the currency and adopt the USD. That could be rather painful at least in the short-run as a high stakes experiment. Markets may nevertheless react somewhat positively if he wins.
Of greater consequence to most of our clients may be the potential for any spillover effects from Argentina’s election upon neighbouring economies and perhaps the broader EM space.
The accompanying charts show the patterns in local currencies leading up to and in the immediate days following past elections in Argentina.
The 2011 election when Cristina Fernandez de Kirchner won in a landslide carried the most noticeable effects. After imposed foreign exchange controls to try to control capital flight, the aftermath saw other regional currencies appreciate as just one example of ripple effects that will need to be carefully monitored this time.- Scotiabank
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