Less than two weeks before the general elections, Argentina’s economy is beginning to explode. The first explosion occurred in exchange: for every dollar they demanded 1,010 pesos on the streets of Buenos Aires that Tuesday; On Monday it could be bought for 945; on Friday for 870. The informal market where these operations are carried out is a remnant, but Argentines view it as a gauge of the health of their economy. Although they are used to the fever rising in moments of great uncertainty, such as on the eve of elections, the 000 peso limit exceeded this Tuesday warns of a serious illness that returns them to the worst crises in their history.
This week’s foreign exchange tensions are of an unprecedented nature: the candidate favored in the polls, the ultra-Javier Milei, has exacerbated them by recommending that the population get rid of the pesos they own because they are not worth “excrement.” . “Now more than ever, don’t skimp on pesos”, affirmed Milei’s candidate for mayor of Buenos Aires, financial YouTuber Ramiro Marra. His statements were criticized as irresponsible by politicians, economists and even business people. The private banks in large numbers are demanding responsibility from the presidential candidates and demanding that they “refrain from making unsubstantiated statements that cause uncertainty among the population and volatility in financial variables.”
Milei’s main rivals in the election campaign, Economy Minister Sergio Massa and conservative Patricia Bullrich, have accused him of setting the country on fire to win votes. However, the currency run puts them in opposite positions. Massa is aware that the devaluation of Argentina’s currency reveals the extreme fragility of an economy flooded with pesos that no one wants. Second in the polls, he knows he needs to regain control as quickly as possible if he wants to stay in the race for the Casa Rosada. Bullrich, on the other hand, believes that the sudden economic deterioration offers him the opportunity to attack his two rivals simultaneously to regain lost support and compete in the second round on November 19th. This will happen if neither candidate wins with 45% of the vote on October 22nd, or with more than 40% and ten points behind the next candidate.
“Argentina is in a situation of extreme fragility,” warns economist Elisabet Bacigalupo, head of the macroeconomic team at consultancy Abeceb. “The background wave is the weak state of the Argentine economy, to which is added statements from a possible presidential candidate who say that dollarization is advisable and that saving in pesos is tantamount to excrement. “This increases uncertainty and the rise of alternative dollars,” adds Bacigalupo.
“People don’t want to have pesos, they are fleeing from pesos and that is a big damage to the economy because it affects inflation,” said Salvador Vitelli of the consultancy Romano Group. This Thursday the CPI data for September will be announced, but it will already be old. Many companies have stopped sales in recent hours due to a lack of prices, while others were preparing to increase prices.
“We saw it coming”
The next president will welcome a country on the brink of collapse, with soaring inflation, high foreign debt in dollars, a budget deficit and red central bank reserves. “In front of those who, as economics ministers, are exacerbating the crisis [por Massa]and from those who scare Argentinians [por Milei]“We are ready to take the reins of the country wherever they leave it,” Bullrich said at a press conference this Tuesday. The candidate canceled her campaign events to appear before the media alongside economist Carlos Melconián, who will be head of the Finance Palace if the Together for Change candidate comes to power. “We saw it coming. The only thing Massa is doing is worsening the crisis. “He speculated that this would happen after October 22nd,” Bullrich said, positioning the ministerial candidate as the main culprit for the crisis.
Milei echoed the Conservative leader’s criticism. “The Kirchner government of Alberto Fernández, Cristina Kirchner and Sergio Massa must come to grips with the economic catastrophe they have caused. Free spending to finance exorbitant public expenses with which the insaurralde of life pay for their lives as monarchs has consequences and all good Argentines pay for it,” Milei said on social networks.
Milei stands by his decision to dollarize Argentina’s economy to “eradicate inflation,” even as his own team disagrees on whether implementing that plan in a country without dollars in the central bank or credit on the international markets is feasible.
Although the official price has remained at 365 pesos per dollar since August, the government devalued it early Tuesday in several parallel offers to reduce demand. It didn’t work: exchange rates continued to rise despite less official intervention. In the afternoon, Minister Massa tried to look for blame externally. He accused “four or five miscreants” of being behind the price surge in recent days and assured that whether he wins or loses the election, he will ensure that they are prosecuted and sent to prison. His promise was met with little enthusiasm by a citizenry demanding answers to avoid waking up poorer every day.