Argentina Enters New Economic Phase Under Incoming President Milei
(21 November 2023 - Argentina) Radical libertarian economist Javier Milei's victory in Argentina's presidential runoff is set to result in the country switching from the heavily depreciated peso to a US Dollar peg.
The enormous policy shift stands in stark contrast to the previous administration's ardent de-dollarization drive after inching closer to outright sovereign default earlier this year.
The new president believes a USD peg will halt hyperinflation that surpassed 142.7 percent in October on the back of a severe depreciation in the peso that's slashed 99 percent of its value against the greenback in 2023. It would also be the first time an economy as large as Argentina has officially adopted the USD.
Argentine economists suggest Milei’s plan to replace the peso with the US dollar is unworkable in the short term given that Argentina has virtually no foreign currency reserves in its central bank and no access to international credit. Argentina is so deficient of US dollars that it used the Chinese RMB to repay part of an International Monetary Fund (IMF) loan in October.
“Today is the end of Argentina’s decline. Today is the end of the model of an omnipresent state that impoverishes Argentines. I want you to understand that Argentina is in a critical situation. The changes our country needs are drastic. There is no room for gradualism” President Milei declared.