Argentine peso surges against dollar, sparking economic debate
The Argentine peso strengthens against the dollar and inflation falls, yet the minimum wage covers only 53% of the basic basket.
English · Original discussion in Spanish · Published
Argentine peso rises against dollar, dividing economic analysis
Argentina has two exchange rates for the US dollar. The official rate, set by decree and practically used only by a select few, and the street rate, known as the blue dollar, which reflects the currency's real value. When Javier Milei took office, the blue dollar was around 1,000 pesos per dollar. Months later, that same rate has appreciated and, according to data circulating in the country, the peso has become the strongest currency in the world against the dollar. The chainsaw works, some celebrate. It is an illusion, others reply.
What peine with the Argentine peso
The previous government maintained an artificially low official exchange rate, around 350 pesos per dollar, available only to those with privileged access. Exporters were forced to sell their dollars at that price, losing most of their income. On the street, nobody exchanged at that value. The blue dollar, floating freely, depreciated every time the Central Bank issued pesos. Upon Milei's arrival, the blue dollar was near 1,000 pesos.
With the new administration, part of the intervention on the official exchange rate was lifted, causing it to drop sharply before stabilizing. The blue dollar has also been receding. According to cited data, today the blue dollar trades at 1,045 pesos per dollar and the official rate at 875 pesos. Inflation has dropped drastically, and some analyses argue that Argentina may have the lowest inflation in the world over the last six months.
The reduction in inflation and exchange rate stability are the arguments put forward by those defending the management. It is highlighted that Milei achieved what his predecessor failed to do despite spending nearly 20 billion dollars from the country's reserves to try to contain the official value. And it is emphasized that he did not deplete reserves that were already almost non-existent.
Impact on wages and purchasing power
Against macroeconomic data, another part of the analysis focuses on everyday reality. The minimum wage went from covering 81% of the basic food basket to 53%. That is, workers' incomes have significantly lost purchasing power. For households paid in pesos without access to dollars, the currency appreciation does not necessarily translate into a better standard of living.
Some argue that those who saved in dollars were those who could afford it, while working classes are paid in pesos. From this perspective, the exchange policy harms foreign currency holders and benefits wage earners. Other analyses, however, point out that the fall in real wages shows that the adjustment is falling on the most vulnerable.
Criticism of Milei's management
One school of thought holds that the peso's appreciation is actually a way of devaluing the savings of those who switched to dollars trinc the president's promises. They argue that Milei incited Argentines to get rid of their pesos and now the local currency is revaluing, harming those who listened. However, this thesis is strongly rebutted: handling dollars in Argentina has been widespread long before Milei, and the official exchange rate was never the one used by ordinary people.
The discussion often turns into an exchange of accusations about double standards. Some participants complain that any left-wing measure is harshly criticized while right-wing ones are overlooked. Others respond that this is a smokescreen to avoid acknowledging positive data. The debate gets heated and sometimes loses sight of the central issue: the evolution of the Argentine economy.
International context and outlook
Argentina is a country with a history of recurrent economic crises, defaults, and high inflation. Milei's arrival marked a radical shift in economic policy, with a program of public spending cuts and deregulation. Short-term results are disputed. While some see signs of stabilization, others warn that the improvement is fragile and could reverse.
The appreciation of the peso against the dollar is a fact observable in exchange rates. So is the reduction in inflation. What is under discussion is the sustainability of these trends and their real impact on the population. Time will tell if the chainsaw continues to work or if, as some antiestéticar, it is an illusion before the next storm.
Argentina has two exchange rates for the US dollar. The official rate, set by decree and practically used only by a select few, and the street rate, known as the blue dollar, which reflects the currency's real value. When Javier Milei took office, the blue dollar was around 1,000 pesos per dollar. Months later, that same rate has appreciated and, according to data circulating in the country, the peso has become the strongest currency in the world against the dollar. The chainsaw works, some celebrate. It is an illusion, others reply.
What peine with the Argentine peso
The previous government maintained an artificially low official exchange rate, around 350 pesos per dollar, available only to those with privileged access. Exporters were forced to sell their dollars at that price, losing most of their income. On the street, nobody exchanged at that value. The blue dollar, floating freely, depreciated every time the Central Bank issued pesos. Upon Milei's arrival, the blue dollar was near 1,000 pesos.
With the new administration, part of the intervention on the official exchange rate was lifted, causing it to drop sharply before stabilizing. The blue dollar has also been receding. According to cited data, today the blue dollar trades at 1,045 pesos per dollar and the official rate at 875 pesos. Inflation has dropped drastically, and some analyses argue that Argentina may have the lowest inflation in the world over the last six months.
The reduction in inflation and exchange rate stability are the arguments put forward by those defending the management. It is highlighted that Milei achieved what his predecessor failed to do despite spending nearly 20 billion dollars from the country's reserves to try to contain the official value. And it is emphasized that he did not deplete reserves that were already almost non-existent.
Impact on wages and purchasing power
Against macroeconomic data, another part of the analysis focuses on everyday reality. The minimum wage went from covering 81% of the basic food basket to 53%. That is, workers' incomes have significantly lost purchasing power. For households paid in pesos without access to dollars, the currency appreciation does not necessarily translate into a better standard of living.
Some argue that those who saved in dollars were those who could afford it, while working classes are paid in pesos. From this perspective, the exchange policy harms foreign currency holders and benefits wage earners. Other analyses, however, point out that the fall in real wages shows that the adjustment is falling on the most vulnerable.
Criticism of Milei's management
One school of thought holds that the peso's appreciation is actually a way of devaluing the savings of those who switched to dollars trinc the president's promises. They argue that Milei incited Argentines to get rid of their pesos and now the local currency is revaluing, harming those who listened. However, this thesis is strongly rebutted: handling dollars in Argentina has been widespread long before Milei, and the official exchange rate was never the one used by ordinary people.
The discussion often turns into an exchange of accusations about double standards. Some participants complain that any left-wing measure is harshly criticized while right-wing ones are overlooked. Others respond that this is a smokescreen to avoid acknowledging positive data. The debate gets heated and sometimes loses sight of the central issue: the evolution of the Argentine economy.
International context and outlook
Argentina is a country with a history of recurrent economic crises, defaults, and high inflation. Milei's arrival marked a radical shift in economic policy, with a program of public spending cuts and deregulation. Short-term results are disputed. While some see signs of stabilization, others warn that the improvement is fragile and could reverse.
The appreciation of the peso against the dollar is a fact observable in exchange rates. So is the reduction in inflation. What is under discussion is the sustainability of these trends and their real impact on the population. Time will tell if the chainsaw continues to work or if, as some antiestéticar, it is an illusion before the next storm.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (191 replies).
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