Argentine stocks and bonds experience a sharp decline following Milei's electoral loss
In the recent provincial elections, Javier Milei's party, La Libertad Avanza, faced a significant setback, with over 47% of votes going to the left-wing opposition. This result suggests that the party may struggle in the upcoming October parliamentary elections.
The elections in the Buenos Aires province, home to more than a third of the South American country's population, were seen as a litmus test for Milei's popularity and support for his reform agenda. The provincial election results saw Milei's party securing approximately 34% of the vote, a substantial drop from the opposition's share.
The political leadership in Argentina remains with President Milei's party, but the government still hopes to gain more representatives in the upcoming parliamentary elections. However, Milei's approval ratings have taken a hit due to a corruption scandal involving his sister, Karina.
The scandal involves a pharmaceutical company allegedly paying bribes to secure multi-million-dollar contracts with the authority responsible for caring for disabled people. Milei's sister, Karina, is also said to be involved in the corruption scandal.
The losses on Argentine stocks, bonds, and currency came under pressure after Milei's party suffered this landslide defeat. Argentine stocks on Wall Street lost over 21 percent, and the leading Argentine stock index Merval dropped more than eleven percent in early trading. Dollar bonds lost around five cents per dollar in early trading, and the official exchange rate of the Argentine peso fell by five percent from its value on Friday to 1460 pesos per dollar.
The head of state acknowledged a "clear political defeat" for Milei's party, and the left-wing governor of the Buenos Aires province, Axel Kicillof, called on Milei to govern for the people, not for outsiders, corporations, or the wealthy.
The elections are seen as the most important indicator of Milei's performance in the national mid-term elections in October. With the corruption scandal and the recent election results, it remains to be seen if Milei's party will regain the support needed to make significant progress in the upcoming parliamentary elections.
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