Argentine president's ruling party shocked by defeat in primary elections

Following the results on Sunday Macri vowed to'redouble his efforts to ensure victory in October

Following the results on Sunday Macri vowed to'redouble his efforts to ensure victory in October

"We will probably see inflation rising, assuming the peso doesn't recoup some of those loses", said Edward Glossop, Latin America economist for Capital Economics.

Macri, who is running for reelection, has been ruling amid an economic recession that saw the South American country apply for the largest loan in the history of the International Monetary Fund (IMF), and the Argentine currency peso plummeted to a record lows.

He vowed to "redouble" his efforts to secure victory in October's presidential elections.

The preliminary results from Sunday's voting suggest the conservative Macri will face an uphill battle going into general elections in October and it sent Argentina's stocks, peso and bonds tumbling over concern at a return of the populist governments that preceded him.

To win outright on October 27, the top candidate must receive 45 percent of valid votes, or 40 percentof them with a 10 percentage point difference from the second-placed contender. Trading of the USA dollar opened in Buenos Aires markets at 59 Pesos to the dollar, but rapidly climbed to 65 Pesos and closed at 58 Pesos.

The currency had hit an all-time low on Monday of 65 to the dollar, a drop of 30 per cent, on fears that a Fernandez government could take Argentina back to interventionist economic policies. "In a nutshell, the market thinks Fernandez is the return of populism", said Claudio Irigoyen of Bank of America Merrill Lynch (BAML).

"It's clear that Macri's weakest point is the management of the economy, despite the fact that it has improved in the last three months", said Mariel Fornoni, director of the political consultancy Management & Fit.

Fernandez said the market reactions were in response to Macri's failures on the economy.

"We always fixed problems that others generated. This gives us the responsibility that we have to reach everyone to give them absolute peace of mind", she said.

Cristina Fernandez is now facing a series of trials for corruption during her 2007-2015 administration.

In a recorded message from the southern province of Santa Cruz, she said Sunday's results made her Frente de Todos - Front of All - party "happy and optimistic".

The Argentine stock exchange failed to soften the fall, going from 44 thousand points to 28 thousand points.

The possibility that Cristina Fernandez could return to power put markets on edge.

But strangely enough, during the campaign Fernandez said the Argentine Peso was overvalued and its true price was closer to 57/60 Pesos, which is the current quote in the foreign exchange market.

Right-wing Brazilian President Jair Bolsonaro warned that his country could see a wave of migrants fleeing Argentina if Fernandez wins the presidential election.

Argentina's 2028-maturing, euro-denominated bond was down nearly 9 cents in European trading on Monday, Tradeweb data showed.

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