Brazilian President Jair Bolsonaro said on Wednesday that Argentina was heading for chaos as “leftist bandits” who performed well in the primary election will follow the path of Venezuela, which is mired in a deep economic crisis. Argentina's Merval stock index was down 34.47% since the start of the week.
In a sign that the market is more wary of holding Argentine debt, five-year credit default swaps (CDS) were marked at 2,720 basis points, over double Friday's closing level of 1,017, according to data from IHS Markit.
Macri's best hope of retaining the presidency is to reach a second round of voting after October's general election, but investors see that as a long shot, said Ilya Gofshteyn, New York-based senior emerging markets strategist at Standard Chartered Bank.
A candidate needs at least 45% of the vote, or 40% and a difference of 10 percentage points over the second-place runner, in order to win the presidency outright.
The Macri administration underestimated the extent of the economic hardship facing Argentine voters, Gofshteyn said.
Argentina's central bank sold US$248 million from its reserves to try to steady the peso by Wednesday afternoon, bringing its total sales in reserve dollars to US$503 million this week.
The bank has about US$66 billion in reserves, of which about US$20 billion are free resources that it can used to pay debt and stabilize the peso, according to an Argentine government official.
Debt payments for the remainder of 2019 are estimated between US$5 billion to US$10 billion, depending on Argentina's ability to roll over domestic Treasury bills, leaving the rest potentially to be used to intervene in the foreign exchange market
There is about US$27 billion in maturities in 2020, according to government data.