Argentina Devalues Peso, Hikes Rates After Libertarian Outsider’s Shock Win in Presidential Primary
The Argentine peso, already at historic lows, puked immediately after far-right political outsider Javier Milei won the country’s primary election on Sunday. He wants a dramatic overhaul of the country’s entire political and economic system, even vowing to ditch the peso.
Milei is a rock-singing libertarian outsider candidate, an admirer of Donald Trump and self-described anarcho-capitalist, and his primary win headed into the October general election is being widely viewed as punishment for Argentina’s two main political establishment blocs – the center-left Peronist coalition and the main Together for Change conservative opposition bloc.
After winning 30% of the vote, beating the main conservative opposition bloc (at 28%) and the ruling Peronist coalition which came in third place, it’s being hailed in Argentine media as a “political earthquake”.
The 52-year-old Milei might also be called the Ron Paul of Argentine politics, given his willingness to controversially raze entire longstanding institutions, including pledges to abolish Argentina’s central bank. He has also talked about replacing the peso with the US dollar and privatizing state-run firms.
Multiple administrations have overseen a years-long spiral into a persisting economic crisis, with year-on-year inflation above 115%, and one in four people living in poverty. The peso has in recent months plummeted such that foreign soccer fans now regularly taunt locals at matches by burning and ripping up the Argentine currency.
Milei’s win, which is being taken as a clear sign of what lies in store for the Oct.22 election, is voters’ attempt to “shock” the system and try something new.
The peso’s plummet prompted the Argentine central bank to hike rates (to 118%!) and devalue the official peso rate to 350/USD in an effort to reassure markets and to prevent a broader selloff of assets from spreading. It hasn’t worked yet as the peso plunge continued and a US-traded Argentina ETF plunges most since March 2020.
