On Monday Argentina’s peso currency dropped over 30% in value to a record low of 65 pesos per 1 U.S. dollar. The country’s central bank intervened in the foreign exchange market, using its reserves to prop up the peso, but it still ended the day around 15% down. At the same time, the Argentine equity markets were doing even worse, with the country’s benchmark S&P Merval Index losing almost half its value in dollar terms. This was the worst daily performance by any stock market in the world for the past three decades and only the second worst in the last 70 years.

In case you missed the news, don’t worry, no foreign power has declared war on Argentina, nor has Buenos Aires been hit by a giant meteor. Instead, the event that triggered such a major financial crisis, with people seeing so much of their life’s savings vanishing into thin air overnight, was just a routine election. On Sunday there was a primary vote that signaled that the current politician in charge of the government might be replaced by another one in a few months, which was enough to send the markets tumbling in historic proportions.

Eva Peron’s portrait on the Argentine 100 peso bill
Looking at the details of the elections that spooked the markets and led to the collapse of the Argentine peso shows that there is room for some concern. The current president of the country, Mauricio Macri, is at least perceived to have tried to fix some of the structural problems of the local economy, even if his detractors can say that he has failed in doing so. His opposition, on the other hand, the Peronist Alberto Fernández and former president Cristina Fernández de Kirchner, are considered to be left wing populists who could set the country back with disastrous policies that will wreck Argentina’s economy once more. Regardless of whether these perceptions are true, the fact is that enough investors hold the news that the opposition might assume control of the government from Macri to be a serious threat to stability.

Sourced through Scoop.it from: news.bitcoin.com