At the end of July, the Argentine president, Javier Milei, and his entire economic team sharply denied the state intervention in the exchange market. , shouted in unison between laughs and blows on the table in a program of streaming. But the Argentines saw in the last month that the weight sank without remedy and threatened to drag with him the main economic achievement of the ultra -rightist government, the decrease in inflation, on the eve of the elections. This Tuesday, with the peso changing to almost 1,385 pesos per dollar – almost 300 pesos above the band of the band and less than 100 of the ceiling – the government communicated a change of strategy. From that moment on, the treasure was enabled to participate in the exchange market and, therefore, the price stopped fluctuating freely according to supply and demand.
The announcement made through X by the Secretary of Finance, Pablo Quirno, did nothing to whiten. According to estimates of vector consultants and 1816, the Treasury has sold about 300 million dollars in the exchange market since August 20.
The new measure has given its first fruits – at the middle of the afternoon the peso had appreciated 10 cents, up to 1,375 pesos per dollar – but at a very high cost for the Argentine state. , the sale of dollars in the exchange market will be against the commitment to accumulate currencies that the Milei government assumed with the International Monetary Fund in April in exchange for. The decision also lights investors on the payment capacity of the bulky debt and interest maturities that Argentina has ahead.
The announced rudder turns is a hard setback for Milei’s international credibility for changing the rules of the game on the fly. Since Argentina raised the exchange rate for people, almost five months ago, a scheme of free floating of the weight between two bands was governed. Milei had assured that it would not intervene in the exchange market unless the weight crossed one of those two bands, set at the beginning between 1,000 and 1,400 pesos per dollar. With the advance of the months, the difference between one and the other was widened in a controlled way.
Upon being, the Argentine president has brought to his memory the moment in which he marked a turning point in his relationship with the markets. This Tuesday’s response has not been good either: Argentine bonds and actions on Wall Street started with falls.
From the Casa Rosada they link the current financial instability to the proximity of the elections and ensure that the waters will calm down when, they trust, they defeat the Kirchner opposition. The national appointment at the polls is next October 26, but all eyes are put in the election of this Sunday in the province of Buenos Aires, the most populous in the country.
La Libertad progresses – which attends allied with the PRO of Macri – for the investigation of a bribes collection network that allegedly orchestrated from the dome of power. Milei clings to the descent of inflation as its great electoral flag. To keep that wild card, you are willing to use the cartridges that are needed.
