Argentina devalues peso after shock primary election result
The state bank Banco Nacion displayed an increase in the exchange rate between the peso and the dollar, with one dollar now worth 365.50 pesos, compared to 298.50 pesos last Friday. This information was captured by Juan MABROMATA.
The Argentine government made a decision on Monday to decrease the value of their currency, the peso, by roughly 20 percent. This was done in preparation for a potential negative response from the market following the impressive performance of far-right politician Javier Milei in a primary election for the presidency.
The state-owned bank, Banco Nacion, revealed that the Argentine peso strengthened against the US dollar, with an exchange rate of 365.50, compared to 298.50 on the previous Friday.
The political maverick Milei, who advocates for the adoption of the dollar as the official currency to rescue the struggling economy, exceeded the predicted outcome in the recent Sunday's election, which has been described by local press as a "sweeping political phenomenon."
Using a distinct method, citizens of Argentina cast their votes to determine their preferred candidate from a pool of 22 hopefuls. This selection process gives political parties the opportunity to choose their strongest contender, all while serving as a crucial measure of public support prior to the significant October election.
Milei obtained 30 percent of the votes, surpassing Patricia Bullrich, the candidate from the right-wing opposition, who received 28 percent. Standing in third place was Economy Minister Sergio Massa, the candidate from the ruling center-left coalition, with 27 percent.
The enormous South American nation is facing a severe economic crisis, marked by a staggering inflation rate of 115 percent per year, and a high poverty rate of 40 percent.
The decrease in the value of the designated official dollar rate is the highest in one day since December 2015.
The black market's "blue dollar" - the easiest to access for locals and companies due to strict currency regulations - was being exchanged for approximately 680 pesos.
The Central Bank of Argentina also declared a substantial rise in its reference lending rate on Monday, a jump from 97 percent to 118 percent. This marks the third significant increase in the past five months.
The bank stated that the decision would provide a cushion for "currency rate predictions, and reduce the impact on prices."
Dollar bonds and Argentine stocks on Wall Street experienced a sharp decline of approximately 10 percent.
