How many of you purchased Argentina's Pesos? I didn't, now I'm sorry! But it's not too late.
The Argentine peso has jumped 25% against the dollar in three months, and President Javier Milei's measures are controlling inflation and demand. Spending cuts have also caused a recession.
While Argentina's President Javier Milei still hasn't dollarized the economy as promised, he has managed to strengthen the peso.
The currency was one of the most devalued tenders of 2023, yet it's now the top currency against the dollar.
Bloomberg reports that the peso has gained 25% in the past three months on the blue-chip swap market, one of Argentina's key foreign exchange markets.
It's a welcome side effect of Milei's numerous reforms. The president won the election by pledging a massive economic overhaul, and in many ways, he's kept his word. Bloomberg reported that capital spending dropped 85% in the first quarter due to extreme austerity measures.
The approach is motivated by Argentina's blowout hyperinflation conditions, with the 12-month rate reaching 276.2% in February: the worst rate in the world.
Meanwhile, the strategy has sent the Argentine economy into a deep recession, and protests against spending cuts have become frequent. The economy contracted 3.6% in 2024's first two months, according to the Financial Times.
Given Milei's disdain for the peso last year, it is ironic that he is now leading the peso out of tougher times.
"The peso is a currency emitted by Argentine politicians, so it cannot be worth excrement," he said during the election when it reached over 1,000 per dollar.
Milei instead proposed ditching the peso and replacing it with the US greenback as Argentina's official currency, as many Argentines already used it for transactions.
In response to his changes, confidence in the peso has returned, easing demand for dollars. According to Bloomberg, this has allowed the central bank to gradually replenish its greenback reserves.
