Calm before the storm

With the election just days away, candidates make their final moves

Call it the calm before the storm. This week was relatively tranqui, at least when compared to last, during which a combative presidential debate preceded a run on the peso. Candidates this week have largely focused on keeping their houses in order.

Given the results of the primaries and recent polls, the best that Juntos por el Cambio (JxC) candidate Patricia Bullrich and Unión por la Patria candidate Sergio Massa can hope for is that one of them forces a runoff vote. La Libertad Avanza’s (LLA) Javier Milei is angling to take the presidency in Sunday’s first round. 

To do so, he’ll need to win either 45% of the vote or 40% of the vote with a 10 percentage point lead over the runner up. Both are reaches given current projections. Nevertheless, #Mileienprimeravuela (Milei in the first round) abounds on X. 

Much remains uncertain — the primaries did little to clarify the electoral picture — but it’s possible that Milei wins outright on Sunday. Should he not, Sergio Massa, who has consolidated the support of Peronism’s numerous factions, would likely face off with him in the second round, which would be on November 19. 

The scene isn’t looking great for Patricia Bullrich. Not only has she struggled to attract undecided voters, she hasn’t even gained the full support of JxC. After a bruising primary against Buenos Aires City Mayor Horacio Rodríguez Larreta, the bloc was left fractured. 

Many Larreta supporters remain skeptical of Bullrich. As I’ve written in the past, she’s either too right-wing, too confrontational, or too vague in her policy proposals for many of the mayor’s backers. 

In an effort to drum up support with JxC moderates, Bullrich announced this week that Larreta would serve as her chief of staff, citing his “managerial capacity.” Whether the last-ditch effort will yield results remains to be seen. 

During his campaign, Larreta emphasized cooperation, a note that Massa hit repeatedly during the last debate. In nominating her former rival, Bullrich has bet that she’ll have an easier time capturing moderate voters who might swing towards Massa than those who have already sided with Milei. 

In contesting the political center, she might boost her own standing, but to Massa’s detriment. Ultimately, by pulling down Massa enough, Bullrich could pave the way for a Milei victory in the first round. 

As Bullrich battles for moderates, Massa’s Peronists are trying to shore up confidence in their nominee while hitting out against Milei. 

President Alberto Fernández on Wednesday secured a 47 billion yuan (US$6.5 billion)  extension to its currency swap with China. The badly-needed support package will help the government finance imports and defend the peso on both official and parallel exchange markets. 

Economic volatility, particularly drastic exchange rate swings like the one seen last week, help libertarian Javier Milei, who promises to dollarize Argentina’s economy. 

With an eye to a potential runoff (November 19), the Central Bank will use Beijing’s swap extension to stabilize the currency through mid-November. Massa’s Economy Ministry has already pledged to maintain the current official exchange rate––AR$350 to US$1–– through November 15.

The defensive measure seeks to neutralize the economic uncertainty that pushes many towards Milei, who proposes what his supporters view as simple and clear solutions to Argentina’s economic woes. 

Earlier this week, the Transportation Ministry announced that anyone could opt out of public transport subsidies by registering their metro cards online.  Full-price public transport tariffs are about 720% higher than subsidized rates. The statement was a veiled jab at Milei, who proposes no state intervention in the economy.

Many Milei voters might be drawn more to his personality and promises of change than his policies. The government’s subsidy announcement targets those voters, aiming to demonstrate the real-life impacts of Milei’s proposals.

And what of the libertarian frontrunner himself? Milei’s camp spent the last week rolling out controversial policy proposals. They include allowing fathers to opt out of child support payments, privatizing Argentina’s railways, and eliminating utilities subsidies. 

Those policies represent a last push by LLA to differentiate itself further from Juntos por el Cambio and the Peronists by unveiling clear, visible policies, no matter how unpopular or outlandish they may be.

Playing into Milei’s mantra of removing the state from economic and social life, they might resonate with his base — primarily young men who are disillusioned with the state of the economy or opposed to social progressivism. 

Come Sunday, we’ll see the results of two months of campaigning. Either way, one thing is clear — it’s a tough time to hold pesos. Expect volatility in currency markets next week as traders react to Milei’s performance.

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