Monday, December 11, 2023

Argentine markets, attentive to signals from the elected president

Analysts have given their opinion on the victory of the ultra-liberal Javier Milei in Sunday’s presidential runoff in Argentina, defeating the current Minister of Economy, Sergio Massa, in the race.

The third largest economy in Latin America is accompanied by inflation projected at 180 percent in 2023, strong devaluation pressure, a high fiscal deficit, a reduction in the net reserves of the central bank (BCRA) and a growing poverty rate.

“The president-elect must eliminate the various sources of uncertainty affecting Argentines. He must wear the uniform of the leader from the point of zero,” said Pablo Besmedrisnik, director and economist of Invenómica.

“Today’s instability and the sudden changes that occur in various macro variables are a reality. That is why it is important not to describe the situation well, but at the same time to show the first signs of an action plan that will complete the formation of the necessary stabilization plan,” he said.

“I think there will be some correction,” said analyst Salvador Vitelli. Expect “a dollar less launched and futures hotter,” he said.

Incendiary or domesticated?

“It is important (…) the signals it gives, if it is an ‘incendiary’ Milei like PASO (August primaries) or a ‘tame’ from the general elections (in October). The latter can be’ g will translate well to the market,” said Roberto Geretto of Fundcorp.

“It is recognized that the implementation of a comprehensive stabilization plan will be urgent for the new administration, within a ‘honeymoon’ that may be shorter than usual due to the delicate context and where there is a need for extensive political support,” said economist Gustavo. Ber.

Waiting for announcements

“Tomorrow, during the local holiday (for National Sovereignty Day), the attention will focus on ADRs, dollar bonds and the evolution of the crypto dollar, which at the beginning will have a quick reaction until there are details of the plans, ” he added.

“The mitigating factor is that in this election, Milei did not win alone, but he did it with the team of (former president Mauricio) Macri. In this sense, we have to wait for their announcements, to see- let’s see if they will move to moderation, to know how fast the peso will be removed, how fast their dollarization plan can progress,” commented Javier Casabal, of Adcap Grupo Financiero.

Uncertainty about dollarization

“The market will reduce the uncertainty about the dollarization plan and there will understand if it has increased too much or not, if it has overreacted, but the first logical reaction is to increase the dollar,” he said.

“With the victory of Milei, a contained increase in bonds is expected in a country that needs to correct macro problems (…) the equivalent dollar will rise (the peso will fall) and the official will depend on the transfer of Massa with Milei,” explained economist Camilo Tiscornia.

For the analyst Damián Di Pace, “starting tomorrow (Monday) everything that happens is not the responsibility of the new president (…) but of those who leave and leave their position of management until December 10 . Political, economic and social responsibility is required.”

World Nation News Desk
World Nation News Desk
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