Argentina’s stock market reacted with optimism Tuesday to the resounding election win by libertarian Javier Milei, despite the country being gripped by uncertainty over what changes the self-described “anarcho-capitalist” will bring.
Milei, a 53-year-old economist who has vowed to scrap multiple government departments and sometimes campaigned by waving a chainsaw from the stage, trounced Argentina’s long-dominant Peronist coalition as voters punished the government for decades of economic decline.
Latin America’s third-biggest economy is creaking under annual inflation of 143 percent.
Monday, the day after the election, was a public holiday in Argentina, delaying the market reaction. But immediately Tuesday, the stock market opened up 20 percent, before easing off to gains of about 14 percent.
Argentina’s peso is strictly controlled, and the informal “blue dollar” exchange rate — seen as a baromoter of panic in the country — reacted with moderation, rising slightly to 1,050 pesos to the dollar.
The rate is almost three times the official rate of 371,50, and analysts warn a devaluation is long overdue.
Milei has vowed to ditch the peso for the US dollar and shut down the central bank — which he accused of rampant money printing to finance government overspending — in a bid to halt inflation.
During his campaign he said he would slash state spending and ditch about 10 government ministries, among other controversial proposals.
However, he later toned down some of his rhetoric, leaving great uncertainty over his actual plans.
In his first interviews on Monday after the election, Milei warned it would take up to two years to tame inflation, and laid out his plans to reform the state.
Milei said “everything that can be in the hands of the private sector is going to be in the hands of the private sector,” including the state oil company YPF and state media.
The rise on Argentina’s stock market was led by state oil company YPF whose shares rose 34 percent after Milei’s remarks.
On Monday, YPF shares listed on Wall Street were up 40 percent at closing.
Milei also said he would push for the elimination of strict currency exchange controls — with analysts saying the official rate of the peso to the dollar is an expensive fiction.
Asked about his dollarization platform, Milei said the priority was “to close the central bank. Then the currency will be the one that Argentines freely choose.”
Milei on Monday held his first meeting with outgoing President Alberto Fernandez to co-ordinate the transition ahead of his inauguration on December 10.
