Stock Prices 'Fluctuate' While Exchange Rates 'Plummet'... Chaotic Argentina

Far-Right Candidate Milley Elected
Pro-Market Policies and Currency Change Expected
Stock Prices Rise and Peso Value Falls
WSJ "Pledge Implementation Likely Difficult"

In the Argentine presidential election, Javier Milei, the candidate of the Liberty Advance Party, has seized victory, causing the market to fluctuate depending on his actions. The stock market surged due to Milei's market-friendly policies, while the value of the peso plummeted following his pledge to adopt the US dollar as the official currency instead of the peso.

President-elect Javier Malley Photo by Reuters Yonhap News

On the 20th (local time) at the New York Stock Exchange, shares of Argentine energy company YPF rose nearly 39% from the previous trading day ($10.73) to close at $15.01 per share. Shares of Grupo Financiero Galicia, which owns Banco Macro and Banco Galicia, two major private banks in Argentina, increased by 20% and 17.20%, respectively, compared to the previous trading day. On that day, Banco Macro closed at $24.32 per share, and Grupo Financiero Galicia closed at $14.65 per share.

As President-elect Milei unveiled a blueprint for market-oriented policies, Argentine-related stocks fluctuated on the New York Stock Exchange. In a local radio interview that day, Milei stated, "All state-owned and public enterprises that can be in the hands of the private sector will be transferred to private ownership," expressing his intention to swiftly implement his pledges. YPF, whose stock price soared in the New York market that day, was cited as a representative company targeted for privatization.

Following Milei's confirmed victory, Argentina's foreign exchange market also experienced turmoil. Milei's pledge to adopt the US dollar as the official currency instead of the peso and to close the central bank had an impact. On the 21st (Korean time), the exchange rate of the Argentine peso against the US dollar rose by 0.03% from the previous trading day to 353.84 pesos. The peso-to-dollar exchange rate jumped 2.04% in just one day from the 19th to the 20th, when Milei's victory was confirmed.

According to ‘BlueDollar.net,’ which provides unofficial exchange rate information for Argentina, the current peso exchange rate stands at 950 pesos per dollar. The Blue Dollar market is a black market where the Argentine peso is traded illegally. On the 10th of last month, the peso-to-dollar exchange rate in the Blue Dollar market rose to 1,010 pesos amid the aftershocks of Milei's remarks about eliminating the peso. This figure is three times the official exchange rate of 365 pesos, which is strictly regulated by the government.

Although Milei has proposed such radical pledges, Argentina's severe economic crisis has driven voters toward him. As of September, Argentina's cumulative inflation rate reached 140%. As a result, 40% of the entire population is struggling with poverty. Milei has been called a ‘maverick’ within Argentina for pledging to cut government spending and close the central bank. Some have even dubbed him the ‘Trump of South America’ due to his frequent far-right remarks.

The market is closely watching what effects Milei's radical market economy policies will have on Argentina's economy. Some analysts suggest that he may face significant challenges in achieving economic reforms due to practical obstacles.

The Wall Street Journal (WSJ) analyzed that "Milei's actions will determine Argentina's future," but also noted that he will face difficulties in realizing his pledges. Regarding the pledge to adopt the US dollar as the official currency, it is expected to be difficult to secure enough dollars to replace the peso given the economic conditions. The fact that the Peronist left-wing ruling party controls the legislature is also seen as an obstacle. WSJ predicted, "If Milei's reforms fail, market economy policies will not take root in Argentina, and Peronism will return."

This content was produced with the assistance of AI translation services.