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When I arrived in Buenos Aires in June 2023, holding the Argentine pesos felt a bit like the burning of money. In my first four months, the currency lost more than half of the value in the midst of an increase in inflation.
Argentines, who generally saved any spare money in US dollars, warned me to do the same. Until October, Javier Milei, a Libertarian economist who nominated himself for President Argentina, declared Peso worth a “less than excretion” and committed to completely abolished and replaced him with a dollar.
Still, for a year in Milei’s Presidency, it’s Peso, not Green, who has a moment.
The case of inflation thanks to Milei’s savings program and its continuous use of strict currency controls led to stabilize Peso in the official exchange market in the black market. This is after a decade of almost constant amortization. In real terms, Peso appreciated more than 40 percent last year – more than any other currency.
For Argentine, this is the latest turn in the long and tumultuous history of Volatility of the currency.
Many local investors use a change in gain by inclusion in stores: getting borrowers in dollars, using cash to buy pesos and collect interest rates, which is larger than the dollar loan rate and Peso devaluation.
While the pain from the economic crisis and the austerity measures are widespread, middle class Argentines are enjoying the fact that Peso salaries are now worth more abroad. They flooded the Brazilian beaches and Chilean shopping centers. “Now is the time to leave, things are cheaper anywhere, but here,” said María Cristina, a Patagonia teacher.
The experience of using monetary pesos during shopping has become less clumsy. Freshly forged 10,000 and 20,000 notes, worth about $ 10 and $ 20, replaced the previous largest account, which was worth only $ 2.
In the meantime, those savings in dollars that many hold here are less valuable. Tomás, an Argentine friend studying for the MBA, says he realized that Milei’s policy could lead to a savings of $ 10,000 to amortize himself so much against Peso that he could have run out of money for his course. He decided to turn all his dollars into pesos and invest in deposits associated with inflation. “It was completely counter -attack that the Argentine was getting rid of dollars,” he says. “But if I was holding on to them [the course] could cost me 50 percent more. “
While the Argentines are deftly moving with a new Peso panorama, tourists are caught in unconsciousness. Visitors to Buenos Aires revealed that he had moved from one of the cheapest cities in Latin America, among the most expensive, with bar accounts and restaurants that sometimes exceed Western European and North American levels. In the cooperation area I visit, one digital nomad complained to his friend on Facetime that the food is more expensive here than in Canada: “Pizza is $ 20!” she exclaimed.
Argentines have little sympathy. “And Argentina for a cable award in the last few years is what was shocking, not this,” said one executive director. “Your advantage was our shame.”
How long will the peson force last not clear. Milei has committed to raising the currency and control of capital this year. Economists will observe to see how much dollar demand is released.
There are signs that the dollar will play a bigger role than before, because Milei removes limitations in its use. Companies are now allowed to show prices in dollars along with pesos, although the practice has not yet been widespread. As of this month, the Argentines can use debit cards denominated in dollars. Most importantly, the Amnesty Tax Amnesty encouraged people to deposit about $ 15 billion savings that were put under mattresses or abroad, increasing the ability of banks to offer loans with denominated dollars.
Daniel Marx, a former Finance Minister, says the Argentine government would have to show “long -term consistency” for Peso to truly earn everyone’s confidence. “Human beings tend to protect what they have,” he says. “And if the local currency does not do this, they will seek alternatives.”
