Jonah Shrock is studying history at Brown University in Providence, RI.
Reacting to the results of Sunday's night's PASO primary elections, online trading pushed the peso up close to the 50-mark agains the US dollar on Monday morning, as exchange traders anticipated turbulence in the market.
Before local currency exchanges formally opened, people were already able to buy dollars on the Internet and through home banking platforms from selected banks. in several entities, the price exceeded 49 pesos per dollar for sale – almost three pesos more than the close on Friday August 9 – when it traded at 46.55.
In exclusively online entities such as Balanz, the dollar was also traded at around 49 pesos. In another exchange with a strong digital presence, Bull Market, the U..currency stood at 48.80 pesos from 10pm on Sunday, after the first results were known.
This paints a starkly different picture from that painted during the last round of trading before election day. At that point, the main index of the Buenos Aires Stock Exchange shot up by almost eight percent and surpassed 44,000 points. Country risk, as measured by JP Morgan, banking fell by 22 and stood at 874 basis points, while sovereign bonds grew by an average of 1.1 percent.
Traders and investors had delivered vote of confidence in the Mauricio Macri government last Friday, anticipating a good performance in the PASO primaries for the governmen. However, the results of Sunday's PASO primary elections instead delivered a slap in the face to the Juntos por el Cambio governing coalition: a massive 15-point advantage for Frente de Todos and its presidential hopeful Alberto Fernández.
Official results Monday morning, which 96 percent of the vote counted, showed Fernández with 47.6 percent of the national vote compared to Mauricio Macri, who won 32.8 percent of the vote.
This catastrophic scenario for the government, an outcome which no poll or market analyst anticipated, painted a bleak financial picture on Monday for the government, with onlookers expecting the peso to weaken even further against the greenback and Argentina's country risk (riesgo país) rating to soar. Argentine stocks and assets were also expected to take a strong hit.