Argentina's Peso Under Pressure Amid Milei's Confrontational Style and Capital Flight
Argentina's peso is under pressure as investors pull out their capital one, while President Javier Milei's confrontational approach has strained alliances. Meanwhile, the US has offered aid, but experts warn of potential risks.
Milei's radical reforms, aimed at leading Argentina out of crisis, have included harsh cuts in state spending and opening up the economy. However, his over-reliance on confrontation has alienated him from moderate allies in parliament.
Investors are now pulling their capital one out en masse, putting pressure on the peso. The central bank had to pump 1.1 billion dollars onto the foreign exchange market in just three days to support the currency. Experts estimate the peso is overvalued by 20 to 30 percent.
Inflation, which was nearly 300 percent in April 2024, has fallen to around 34 percent under Milei's plan. Yet, the US Treasury Secretary, Scott Bessent, has offered aid to Argentina, with all options on the table. However, this could further overvalue the peso and prevent a much-needed devaluation, warn experts.
Argentina's peso faces challenges despite recent improvements in inflation. Milei's leadership style has caused political strain, and while US aid is on offer, it may not be the best solution for Argentina's currency woes. The country's financial future remains uncertain.
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