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Latin America

Markets In Argentina Plunge After Poor Primary Showing For Incumbent President

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President of Argentina Mauricio Macri speaks during a news  conference at Casa Rosada on Monday in Buenos Aires.
Ricardo Ceppi, Getty Images

President of Argentina Mauricio Macri speaks during a news conference at Casa Rosada on Monday in Buenos Aires.

A poor showing for Argentina's President Mauricio Macri and a surge for his leftist opponent sparked fears of a possible default on the country's IMF loans, sending the peso to its lowest level in nearly two decades and causing a massive sell-off in the country's stock market.

Although Macri, who belongs to the center-right Republican Proposal party, was not expected to do well in Monday's primary, populist Alberto Fernández and his running mate, ex-president Christina Kirchner, scored 15 points higher in their primary for Citizen's Unity.

The peso closed Monday 15% weaker at 52.14 per U.S. dollar, but earlier in the day it had briefly plunged by nearly 38%.

The country's Merval stock index plummeted by 37.93%.

Macri secured just 32 percent of the vote in his primary, while Fernández got 47 percent in his — making Fernández and Kirchner favorites to win the presidency in October elections.

Macri, who assumed the presidency in 2015, won on a promise to boost the economy. However, he was forced instead to seek a record $57 billion bailout from the International Monetary Fund.

The markets view Fernández and Kirchner, seen as free-spending left-wing populists, with deep suspicion. According to Reuters, Fernández has said he wants to "rework" the country's IMF agreement if he wins the general election.

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Although the drop in the peso was fueled in part by fears that a new government could lead to Argentina defaulting on the IMF loan, the dropping value of the currency will make it that much harder to make those payments.

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