Argentina’s central bank has restricted access to dollars at the official exchange rate until the administration of President Javier Milei announced the first steps of a promised shock therapy program aimed at eliminating inflation.
The monetary authority said Monday morning that the country’s official currency market, where the peso remains overvalued, will operate with limited transactions to give Milei’s team time to comply with procedures. to manage and implement its own policy. Investors are expecting a big devaluation of the currency in the coming days.
Economy Minister Luis Caputo will unveil his first steps on Tuesday as Milei prepares massive spending cuts, chief spokesman Manuel Adorni said earlier from the presidential palace, without provide a specific time for notification. Adorni plans to hold daily press conferences at 9:00 am.
Argentina’s commercial banks opened at 10 a.m. Monday as scheduled, amid expectations that the official peso exchange rate will fall by approximately 44 percent in the coming days. Currently, one dollar is worth 385 pesos in the official exchange rate, compared to almost one thousand pesos in the parallel markets.
Television cameras showed Caputo entering the Ministry of Economy to meet with its officials. And central bank chief Santiago Bausili worked Monday morning on the next policy steps with other members of his team who have yet to be announced, according to two people with direct knowledge of the meeting that took place. at the headquarters of the monetary authority.
Among them are: Verónica Holub, who works in the Treasury Secretariat of the government of Mauricio Macri; Vladimir Werning, another former Macri government official and general director of local brokerage AR Partners; and Alejandro Lew, former financial director of YPF. The people who gave their names asked not to be identified because the information is not yet public.
Milei will ‘fight’ against inflation in Argentina
In his inauguration speech on Sunday, Milei warned Argentines that his first months in office will be challenging as he battles inflation that is more than 140 percent annually. He promised to cut public spending in order to reduce the huge fiscal deficit financed by the central bank, by printing money that would fuel inflation.
“No government has inherited a worse situation than the one we received,” Milei said on Sunday. “There is no alternative to adjustment, and there is no alternative to shock.”
In addition, in front of the citizens, at the foot of the National Congress, the president insisted on his recipe of “adjust” and “shock” to solve the country’s macroeconomic problems, which reach 40 percent poverty, 150 percent exchange gap. between the official rate and the parallel rate (or ‘blue’), poor wages and lack of foreign currency reserves.