Argentina’s Fernandez calls for unity as political ‘circus’ scares markets

Argentine President Alberto Fernandez speaks during a press conference with Spanish Prime Minister Pedro Sanchez (not pictured) at the Moncloa Palace in Madrid, Spain on May 11, 2021. Gabriel Bouys / Pool via REUTERS / File Photo

BUENOS AIRES, Sept.16 (Reuters) – Argentina’s center-left President Alberto Fernandez on Thursday called for unity after a rebellion of far-left ministers threatened to shatter the ruling coalition over a deadly defeat in a midterm primary election.

The government was rocked on Wednesday after Interior Minister Eduardo de Pedro offered his resignation along with several other left-wing officials, signaling a split in the party between more moderate and militant factions.

The government was severely beaten on Sunday in an open primary election, seen as a reliable indicator ahead of a midterm vote in Congress in November in which the ruling party could lose its grip on Congress.

“The ruling coalition must listen to the polls’ message and act responsibly,” Fernandez wrote on Twitter, saying he would ensure party unity and the government would continue to act in a way that it ” considered appropriate “.

“Now is not the time to raise disputes that distract us from our path,” Fernandez wrote.

Political uncertainty frightened investors and weighed on local markets and the peso.

The official peso fell slightly, held in check by tight currency controls, but the currency fell further in popular alternative markets. The S&P Merval stock index (.MERV) fell more than 1%, while sovereign bonds edged down.

In downtown Buenos Aires, protesters marched through the streets both for and against the government, remaining generally peaceful.

Fernandez has not yet officially accepted or rejected the resignations of ministers allied to the more militant “Kirchnerist” wing of the Peronist coalition and to the powerful vice-president Cristina Fernandez de Kirchner.

“All this circus they have put in place creates political, economic and social uncertainty,” said Ramiro Marra, director of Bull Market Group in Buenos Aires. “It increases country risk, makes dollars more expensive and scares off investments.”

Sunday’s election has fueled tensions within the ruling party as it seeks to regain ground, caught between plans to double populist measures or take a more moderate approach to attract middle-class voters who joined the conservative opposition.

“We are facing a political crisis, which can at the same time lead to institutional chaos”, said Raúl Aragón, political scientist. “It was Kirchnerist pressure that got out of hand.”

Reporting by Jorge Otaola and Walter Bianchi; Additional reporting by Hernán Nessi; Editing by Adam Jourdan and Will Dunham

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