October 21, 2019 / 4:47 PM / a month ago

Argentine presidential front-runner urges 'angry' Macri to keep peso stable

BUENOS AIRES (Reuters) - Argentina’s presidential front-runner Alberto Fernandez has called on incumbent Mauricio Macri to keep the peso stable after the next round of their election battle on Sunday and avoid a repeat of the currency crash that followed the August primary.

FILE PHOTO - Argentina's presidential candidate Alberto Fernandez participates in the presidential debate ahead of the October 27 presidential election, at the University of Buenos Aires' Law School, in Buenos Aires, Argentina, October 20, 2019. REUTERS/Agustin Marcarian

Fernandez blew past business-friendly Macri in the primary, setting the stage for an expected outright victory in the presidential election on Oct. 27. The peso plunged more than 30% over the next few days, which Macri said was evidence of the market’s distrust of his populist-leaning rival.

“This is just a sample of what could happen,” Macri said of a possible Fernandez victory. “It could be very serious.”

But a confident-looking Fernandez told reporters on Monday that he expects a smooth transition, provided Macri does not act the sore loser and stir turmoil before the Dec. 10 inauguration.

“All I hope is that Macri does not get angry again and call the central bank and tell it to let the peso fall the way he did last time,” Fernandez said.

“Argentina has to look toward the future. Macri is history.”

On the day after the Aug. 11 primary, Argentines rushed to buy dollars as a hedge against possible economic volatility. Banks lost dollar deposits as customers traded pesos for greenbacks to stash in safety deposit boxes, an oft-repeated move in times of Argentine financial uncertainty.

After loud complaints from bankers, consumers and business leaders, the central bank started spending its dollar reserves to bolster the local currency.

The weak peso hurts consumers by stoking inflation, which rose 5.9% in September alone.

With the economy shrinking and annual inflation at more than 53%, Macri’s unsuccessful handling of the economy has disappointed his supporters and contributed to the popularity of Fernandez among moderate voters.

Having partially recovered since then, the peso is now 22.7% weaker than before the primary. As major parties had already chosen their candidates ahead of the primary, the August vote served as a dress rehearsal ahead of the general election.

Polls show Fernandez, whose running mate is former president and populist Cristina Fernandez de Kirchner, should win by a comfortable margin on Sunday.

To win the presidency outright in October, a candidate must reach 45% of the vote or 40% with a spread of 10 percentage points over the nearest rival. Fernandez beat Macri in the primary by more than 15 percentage points.

Reporting by Hugh Bronstein and Gabriel Burin; Additional reporting by Hernán Nessi; Editing by David Goodman

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