Argentina’s Black-Market Peso Weakens as Macri’s Prospects Slip

Argentina’s black-market peso declined to a nine-month low on speculation the chances of victory for opposition presidential candidate Mauricio Macri have deteriorated.

Investors and savers are increasingly demanding hard currency assets amid concern the next administration will maintain President Cristina Fernandez de Kirchner’s policies, which have been met by low economic growth and soaring inflation. Macri suffered a setback Sunday when his choice to succeed him as Buenos Aires city mayor won the election by a closer margin than expected.

“The currency market is absorbing the uncertainty surrounding elections,” said Luciano Cohan, the chief economist at Buenos Aires consulting firm Elypsis. “The market is giving greater weight to political continuity, and each piece of negative news adds to the contagion on the exchange rate.”

The Argentine peso in the illegal street market, known as the “blue,” slid 1.4% to 14.76 per dollar, the weakest since Oct. 10. The peso in the blue-chip swap, the rate implied by the price difference between dollar and peso securities, also declined to the lowest since October.

Horacio Rodriguez Larreta, supported by Macri, won the election with 51.6 percent of the vote, compared with 48.4 percent for his opponent, Martin Lousteau. Most polls published last week showed Larreta enjoying a 10 percentage point margin.

Cohan said market concern grew after Macri said in a speech following Larreta’s victory that he would keep companies and pensions nationalized by Fernandez under state control. Macri is challenging Daniel Scioli, the front-runner and member of the ruling Victory Front party.

The peso in the official market, which the central bank controls with daily interventions, slid 0.1 percent to 9.1626 per dollar. The Merval stock index gained 0.2 percent after plunging 3.2 percent Monday.

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