Currency value fears after Milei win
Argentines dread drop in already weak peso after election of far-right populist
BUENOS AIRES, Argentina — As soon as Leandro Francisco Diana woke up Tuesday, he reached for his phone like many Argentines on the first business day after the election victory of President-elect Javier Milei.
“I opened my eyes, got my phone and looked for the price of the dollar to see how the country had awakened,” said the 26-year-old Diana, who owns a hardware store with his father in Villa Crespo, a middle-class neighborhood of Buenos Aires.
The exchange rate of the peso with the U.S. dollar has become a widely watched barometer of the nation’s economic health and is top of mind for millions of Argentines coping with triple-digit inflation. Knowing a further depreciation of the peso will boost the price of consumer goods, they are anxious for signs of what Milei’s victory Sunday meant for the value of the currency that has tanked against the U.S. dollar in the past year.
A large depreciation didn’t fully materialize; rather, the dollar’s value in the parallel retail market — popularly known as the “blue dollar” — increased some 13%.
Inflation is running at an annual rate of more than 140%. Uncertainty about prices was rampant this campaign season, with many Argentines stocking up on goods and lining up at gas stations to beat potential post-election price increases. On Tuesday morning, local media were reporting wholesalers were sharply increasing prices.
Prices are pushed higher by a weaker currency that makes imports more expensive. Milei, an outsider and right-wing populist, has also accused the Central Bank of recklessly printing money in order to fund public spending. Inflation is a chief reason voters elected Milei, who promised drastic measures to curb price hikes including deep public spending cuts and dollarization of the economy.
Milei told Radio Mitre inflation is so entrenched it could take him as much as half his four-year term to fix.
Milei, a self-described anarcho capitalist, has said he will abolish the Central Bank and has promoted replacing the local currency with the dollar to rein in inflation.
The government has made access to foreign currency increasingly more stringent, which has caused the parallel market to flourish.
Among his first statements as president-elect, Milei signaled he will focus first on fixing the numerous distortions plaguing Argentina’s economy.
Milei has said he wants to implement broad deregulation that would get rid of restrictions on buying foreign currency that hampered foreign trade and led to the proliferation of exchange rates, and unwind price controls. He also said he plans to put the Central Bank’s balance sheet in order and boost its dollar reserves that have been virtually depleted — and then extinguish it.