Argentina introduced strict exchange controls Monday to preserve depleting reserves as president-elect Alberto Fernandez and incumbent Mauricio Macri held talks, seeking to reassure investors over the country's impending swing from market-friendly policies to protectionism.

The country's central bank said the currency exchange controls would help stem a surge in capital flight, a day after Fernandez swept to victory in presidential elections.

Macri's long-anticipated defeat has set off market jitters about the return to power of protectionist Peronists, including former president Cristina Kirchner, who will be Fernandez's vice president.

The Argentine stock exchange lost 3.9 percent in a volatile day of trading on Monday.

The Fernandez victory -- and an anticipated sea change in Argentine monetary policy -- comes amid a lengthy recession and a debt crunch, which has raised market fears of a possible default on a $57 billion IMF loan.

International Monetary Fund chief Kristalina Georgieva congratulated Fernandez and vowed to work with his government to stabilize the economy.

"We look forward to engaging with his administration to tackle #Argentina's economic challenges and promote inclusive and sustainable growth that benefits all Argentines," Georgieva tweeted.

US Secretary of State Mike Pompeo echoed her comments, saying in a statement that Washington stands "ready to work with Alberto Fernandez as the new President of Argentina to address the interests our countries share."

Breakfast talks

Fernandez had a breakfast meeting at Macri's Casada Rosada palace to begin cooperation on limiting market damage after Argentina's swing back to leftist Peronism.

Financial entities and energy companies -- both favored by the Macri government -- were the hardest hit on the stock exchange.

With almost all Sunday's votes counted, Fernandez's coalition has a narrow majority in the Senate and, thanks to alliances, should replicate that in the Chamber of Deputies. But Macri's bloc will make for a powerful opposition.

Macri said Sunday he invited Fernandez "because he has to start a period of orderly transition that will bring tranquility to Argentines."

Earlier, Fernandez said that "the days of 'us' and 'them' are over. We are in an enormous crisis. Everyone has to take responsibility for what's ahead."

The two posed stiffly for official photos, but there was no immediate statement from either side after the hour-long meeting.

Argentina's president-elect Alberto Fernandez flashes de "V" sign as he leaves the Casa Rosada presidential palace after a meeting with President Mauricio Macri
Argentina's president-elect Alberto Fernandez flashes de "V" sign as he leaves the Casa Rosada presidential palace after a meeting with President Mauricio Macri AFP / JUAN MABROMATA

"Macri is president, but Alberto Fernandez has the power. There has to be some signal that they are working together. If there is no coordination the situation could quickly get even worse," said Nicolas Saldias, Latin American expert at the Wilson Center.

Much of the market jitters center around the return to power of Fernandez's running mate Kirchner, a 66-year old senator and former president facing several graft trials and with a reputation for irresponsible public spending.

Fernandez has insisted his government would not default but rather seek to renegotiate the terms of the IMF loan, and sought to reassure voters that their bank deposits would be safe under his administration.

"It is worth pointing out that Mr Fernandez appears more moderate than his running mate, and he has previously criticized some of Ms Kirchner's more radical policies," analysts Capital Economics said.

Tightening controls

Central Bank President Guido Sandleris said Argentina's international reserves have plummeted by $22 billion dollars since a primary election in August that established Fernandez as the likely winner.

He told a news conference that the bank decided to further tighten exchange controls, effective Monday, after noting "an important demand for dollars" last week.

The bank restricted dollar purchases to $200 per month from the $10,000 per month limit imposed in September, designed to stabilize the peso and stem the flow in the bank's foreign reserves that analysts now estimate have fallen below $15 billion.

Economy Minister Hernan Lacunza said the restriction was transitory and "not permanent."

The peso fell 5.86 percent in the week before the elections, and the week ended with the dollar at 65 pesos.

After Monday's central bank announcement, the peso rose more than three percent, trading at 63 to the dollar in exchange houses.

Argentines have historically sought dollars as a safe haven against high inflation and devaluations of the peso.

Sandleris said the restrictions will remain in force until Fernandez assumes office on December 10.

"I know that this measure, despite being transitory, is strict and affects many people," Sandleris said.

"Its objective is to preserve reserves during this transition period until the new government defines its economic policy and dispels uncertainty."

In December 2015, one of Macri's first acts on assuming office was to eliminate exchange controls imposed by his predecessor Kirchner.