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Argentina’s financial markets reeled in August after presidential candidate Javier Milei won the largest share in the primary election – 30 percent – on a platform of radically cutting spending and using the American currency in place of the Argentine peso, a practice that Ecuador, El Salvador, Panama, and other states also currently employ to stabilize their economies.
As the Financial Times reported, after Milei’s win, to bolster the peso amid this criticism, Argentina’s Central Bank devalued its currency by 18 percent to 350 pesos per dollar and raised interest rates by 21 percentage points to 118 percent. Inflation was running above 115 percent. Forty percent of Argentines live in poverty, incidentally.
Since then, Milei has surged in the polls. Today he is the favorite to win the Oct. 22 election, though the competition between him and his two other leading contenders for the Casa Rosada, the Argentine president’s executive mansion, is fierce, according to Reuters.
In the meantime, however, Argentina’s peso fell to a record low in early October, to 1,000 per US dollar on black markets that offer so-called “dollar blue” rates, the Buenos Aires Times noted. Greenbacks trade at 365 pesos via the Central Bank – but access to foreign currency is extremely limited. Inflation rose to as high as 124 percent in that week.
And last week, a prosecutor launched a criminal case against Milei for deliberately causing a drop in the Argentine currency when he encouraged citizens not to save in pesos. Milei countered that the move was political persecution.
At the same time, incumbent President Alberto Fernandez, who opted not to seek reelection, criticized Milei for deploying rhetoric that hurt the peso’s value. Milei responded by saying Fernandez and other politicians who represent entrenched interests should look in the mirror if they wanted to hold someone responsible for the economic crisis afflicting the country, reported the Associated Press. He wants to abolish the Central Bank of Argentina altogether, of course.
Meanwhile, embracing comparisons between former American President Donald Trump and former Brazilian President Jair Bolsonaro, Milei has denied the role of humans in climate change, criticized the pope – an Argentine, no less – and pledged to ban abortion. He also wants to legalize the sale of human organs, the New York Times reported, saying he believes that a free market in organs would produce a better system for organ transplants than the current one, explained MercoPress, which reports on Latin America.
Argentinians might be receptive to Milei’s radical program because they, like him, say their elites have failed to deliver on the economic promise that democracy was supposed to have delivered after Argentina replaced military juntas and the Peron family with free and fair elections in the early 1980s, wrote Eduardo Levy Yeyati, a former chief economist at the Central Bank of Argentina, in the Americas Quarterly.
The people are hungry, for sustenance and solutions.