Exports, exchange rate, bilateral affairs: how a Bolsonaro win could impact Argentina-Brazil ties

Senator and Liberal Party leader Flávio Bolsonaro’s unexpected win in the Brazilian elections on Sunday was well received by the market, as evidenced by the strong appreciation of the real and the rise in Brazilian stocks. 

Argentine stocks and sovereign bonds also benefited from the rally coming from the neighboring country. 

The news is an early sign of something market analysts are already predicting: that President Javier Milei and his administration would be another of the beneficiaries if the opposition candidate triumphs in the runoff at the end of the month.

For Sergio González, investment office head at brokerage firm Cohen Aliados Financieros, the “compression of the region’s risk premium,” a product of the expectation of a more fiscally disciplined government with a more capital-friendly stance, tends to attract flows toward Latin American assets. 

“That favors Argentine sovereign bonds in dollars, local stocks with exposure to Brazil, and Brazilian cedears,” he told the Herald.

For international market analyst Martín Cordeviola, of the brokerage firm Portfolio Personal Inversores (PPI), however, the effect on Argentina’s stocks, bonds, and country risk would be limited. 

“A better climate in Brazil can attract flows toward the region and improve the general tone of Latin American assets, but in the Argentine case, local factors weigh much more,” he said.

A stronger real works in Argentina’s favor The appreciation of the real is the most relevant aspect of a possible Bolsonaro victory, given that Brazil is Argentina’s main trading partner. 

According to the INDEC statistics bureau, bilateral trade between both countries between January and August 2026 reached US$19 billion, with exports totaling US$8.5 billion and imports US$10 billion.

Eco Go economist Honorio Zabaleta said that “a very relevant part of our industrial exports go there.” 

Approximately 64% of Brazilian exports in 2026 come from industrial manufacturers (around US$5.4 billion).

“An appreciation of the real created a greater advantage for [Argentina], as our exports would become cheaper for them. This would lead to an improvement in the trade balance,” he said. 

“This, in turn, means that vacationing in Brazil is going to become more expensive,” he added.

Cordeviola, on the other hand, highlighted that if Bolsonaro’s victory is accompanied by a “credible” fiscal adjustment, it should compress Brazil’s risk premium and provide support to the real. 

This would “improve Argentine competitiveness” against the neighboring country. 

“It is not a minor detail: the real accounts for 28% of Argentina’s multilateral real exchange rate,” he said.

Analysts at Max Capital explained that “fiscal deterioration is the biggest problem for the Brazilian economy, and Bolsonaro is proposing a new fiscal rule,” under an economic team that would share members with his father’s administration.  

According to their projections, the real would appreciate by around 5% if the Liberal Party candidate wins the runoff on October 25. The Brazilian Central Bank’s rates should fall between 20 and 30 percentage points, from 13.75% annually. 

González stated that “a firmer real,” together with a Brazilian economy with a fiscal anchor and falling rates, would improve demand for Argentine exports, “especially those from the automotive sector and regional economies.” 

Political affinity Cordeviola mentioned that another aspect to analyze would be the greater political alignment between Milei, Flávio Bolsonaro, and the Trump administration, given that it could “facilitate the bilateral agenda.”

Analysts at Max Capital stated that the presence of a “natural ally” for President Milei “is good news that should accelerate the global integration of Mercosur.”  

González reached a similar diagnosis, suggesting that the political affinity between both governments could “unlock” the Mercosur trade agenda, including the agreement with the European Union.

Zabaleta commented that this could trigger several events. Among other things, he mentioned the possibility of trade agreements (such as supplying Brazil with gas from Vaca Muerta) and the opportunity to work together to strengthen the region’s exposure to Washington and the rest of the world.

Doubts about the fiscal program Although the outlook in general is beneficial for Argentina, Zabaleta pointed to uncertainty in one particular area: Bolsonaro’s fiscal program. 

“Why does this matter? Because a large austerity plan can initially generate a negative impact on Brazilian demand. A lower Brazilian income can depress demand for Argentine products,” he said.

Thomas Haugaard, portfolio manager at global asset management group Janus Henderson, stated that Brazil’s fiscal credibility will remain the main medium-term variable for the market.

 “A disciplined fiscal framework could reduce sovereign risk premiums, improve debt dynamics, and favor capital flows,” he said, adding that the market will demand “execution” of policies and not just signals coming from the election result. 

Eco Go economist Honorio Zabaleta added a second risk factor: the trade policy Bolsonaro will pursue. 

“If he carries out a process of greater trade openness, expanding the number of markets with which Brazil can trade, Argentina will face greater competition.”

That takes on particular importance within the trade agreement between Mercosur and the European Union, a variable that could increase European competition with Argentine products. 

“Not only in the automotive sector, but also in agro-business and pharmaceutical products,” Zabaleta said.