The clear victory of the left-wing Kirchnerist ticket in the Argentine presidential primaries surprised investors, toppled the stock exchange and sent the dollar high on Monday in Argentina, dragging down the Brazilian market.

Argentines voted on Sunday in a preview of what will likely happen in the October Presidential elections.

Among the leaders of the elections were the current president, the liberal Mauricio Macri, and the Kirchnerist ticket, led by Alberto Fernández, who has former president Cristina Kirchner as his vice.

The financial market was already expecting a defeat for Macri, but with a smaller margin--between the plates of 3 to 5 percentage points.

Argentina's President Mauricio Macri attends a news conference after the presidential primaries, in Buenos Aires, Argentina August 12, 2019. REUTERS/Agustin Marcarian - REUTERS

The distance of about 15 points in the primaries signaled that Fernández could win in the first round - which triggered an instant negative reaction. The Merval Index, Argentina's leading stock market, plunged 37.35%. The peso depreciated 17%.

In Brazil, the Ibovespa retreated 2%, going to 101,915 points at the close, but at the worst moment fell 2.3%. The Brazilian currency suffered contagion. It was negotiated above R $ 4 in the morning. The dollar ended up closing with a high of 1%, to $ 3,985, its highest level since May.

The Argentine government is trying to contain damage to the economy. The central bank raised the country's base rate by ten percentage points, bringing interest rates to 74% per annum. It also auctioned $ 105 million to soften the high dollar.

He managed to hold back the devaluation: from the peak of 62 pesos per dollar, it dropped to 53 pesos per dollar, according to Bloomberg.

It was the first time the Argentine central bank had used its reserves to contain the peso's devaluation since September 2018. Dollar auctions in recent months have been held using Treasury funds.

The Argentine stock exchange failed to soften the fall, going from 44 thousand points to 28 thousand points.

On Friday (8), the index climbed 8% with investors expecting primaries to show a more even dispute.

According to analysts in Brazil, the eventual return of Kirchner's group to power in Argentina would have negative effects on the economy of the entire region.

Translated by Kiratiana Freelon

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