The Argentine currency has appreciated by 25% against the dollar this year, since the election of Javier Milei to the country’s presidency. The data was obtained from the rate known as blue-chip swap, widely used by investors and companies. This appreciation exceeds the gains observed in any of the 148 currencies monitored by the Bloomberg website.
The appreciation of the Argentine peso can be attributed to the public spending control measures implemented by Milei. The president seeks to contain inflation, which reached an annual rate of almost 300% during the previous government. The cuts in public spending are equivalent to almost 4% of the country’s Gross Domestic Product (GDP), according to authorities at the Central Bank of Argentina. It is estimated that this adjustment represents more than 90% of all cuts made around the world in recent decades.
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“A new thing in Argentina is that the leader does not hesitate to bear the political cost associated with austerity”, highlighted Javier Casabal, head of research at AdCap Grupo Financiero in Buenos Aires. “That’s unusual.”
As a result of the stability of the Argentine currency, the Central Bank has been able to intervene daily in the market to acquire dollars and increase international reserves. This situation contrasts with the policies adopted by many countries, which are currently seeking to strengthen their currencies in the face of the appreciation of the dollar.
Last Monday, April 22, Milei announced a fiscal primary surplus of 0.2% of GDP for the first quarter of the year, something unprecedented in the country since 2008. Furthermore, the president carried out a review of his management and of the legacy left by his predecessor, the Peronist Alberto Fernández.
In his 16-minute speech broadcast on national television, Milei highlighted: “Zero deficit is not just a marketing slogan, but a guideline for this government.”
The immediate reaction of the financial market was positive, with Argentine shares recording a strong increase on both the national and international stock exchanges.
A survey carried out on January 15 of this year on the approval of 15 Argentine politicians revealed that Javier Milei, the current president, has the approval of 58% of the population. On the other hand, former president Cristina Kirchner continues to be rejected, with a disapproval rate that exceeds 67%.
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