Argentina’s peso slumped more than 11 percent against the US dollar Monday, after Javier Milei’s libertarian government loosened currency controls to win a $20 billion IMF bailout.
The peso was trading at just under 1,200 to the greenback, surging toward the middle of a new trading band, and testing the nerve of Argentine authorities.
Easing currency restrictions is a major political gamble for Milei — a weaker peso would make Argentine exports more competitive, but hike the cost of imports, potentially hurting consumers.
He faces midterm elections later this year and received an ominous warning from voters in a provincial election Sunday, when his party finished third.
But the self-styled “anarcho-capitalist” has vowed to fix Argentina’s perennially crisis-hit economy whatever the cost.
Since coming to office in 2023 Milei has slashed spending, fired tens of thousands of public sector workers and undone a raft of controls that economists believe skewed the economy.
The country has needed 23 IMF bailouts since 1950, been iced out of international bond markets and has often spent more than it could borrow.
Markets have reacted positively to Milei’s reforms but he faces a fierce domestic backlash from opponents who have launched a series of general strikes.
“The country appears closer to a semblance of macroeconomic stability than at any point since the 2000s,” said Kimberley Sperrfechter, an emerging markets specialist at Capital Economics.
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