Following the unexpected victory of far-right libertarian Javier Milei in the primary election, Argentina’s central bank depreciated its currency, the peso, by over 18% and increased its benchmark interest rate by a staggering 21 percentage points to 118% on Monday.
The administration made the changes in an effort to calm the markets following the Argentine congressman’s unexpected triumph, which earned him a vote share of about 30% in the country’s presidential primary election, significantly above expectations.
Markets had banked on successful outcomes for moderate candidates. October will see the presidential election in Argentina.
On Monday, both the country’s sovereign dollar bonds and stocks fell.
The peso will be maintained at 350 to the dollar until the election in October, the central bank announced on Monday.
Riding a wave of public unhappiness, Milei has threatened to abolish the central bank and convert Argentina’s economy to the dollar. He has also pushed for significant spending reductions.
Argentina, the third-largest economy in Latin America, has been enduring a protracted financial and economic crisis. The nation’s foreign reserves are rapidly decreasing, and 142.4% annual inflation is predicted.
Argentina is about to enter its sixth recession in the past ten years. Milei has been outspoken in his criticism of the country’s authorities, whom he accuses of leading the nation into crisis after crisis. =