Argentina devalues peso after shock primary election result
The state-owned Banco Nacion revealed that the Argentine peso increased its trading value against the US dollar, reaching 365.50 pesos per dollar. This figure rose significantly compared to the previous trading value of 298.50 pesos per dollar observed on Friday.
On Monday, the Argentine government reduced the value of their currency, the peso, by approximately 20%, in response to fears of a negative reaction from the market due to the impressive showing of far-right politician Javier Milei in a presidential primary election.
The state-owned bank, Banco Nacion, recorded a currency exchange rate of 365.50 pesos per dollar, marking an increase from the previous rate of 298.50 on Friday.
The political newcomer Milei, known for his libertarian views and the idea of implementing the dollar as the national currency, exceeded expectations with his strong performance during Sunday's election. Local news outlets described this unexpected outcome as a "political revolution."
In a distinctive manner, residents of Argentina cast their ballots to show their preference for one out of 22 possible candidates. This process enables parties to choose their leading contender, while also serving as a crucial indicator of popularity prior to the October election.
Milei obtained 30 percent of the votes, surpassing the right-wing candidate Patricia Bullrich, who obtained 28 percent, and Economy Minister Sergio Massa, who represents the ruling center-left coalition and came in third place with 27 percent.
The immense nation of Latin America is currently experiencing a profound economic downturn, characterized by an annual inflation rate of 115 percent and a poverty rate of 40 percent.
The decrease in the value of the designated official dollar rate is the biggest in a solitary day since December 2015.
The unofficial market's "blue dollar" -- the easiest to access for residents and businesses in the face of stringent currency regulations -- was being exchanged at approximately 680 pesos.
In yet another move, the Central Bank of Argentina has revealed a substantial surge in its primary interest rate, skyrocketing from 97 percent to 118 percent. This marked the third significant increase within a span of five months.
The bank announced that the action would assist in softening "forecasts regarding currency exchange rates and reducing the impact on prices."
The value of dollar bonds and Argentine shares on Wall Street experienced a significant decline of approximately 10 percent.
