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Argentina’s new President Javier Milei has begun a cleaning exercise on the financial landscape of the Central America country barely three days after his installation with the Peso Devaluation.
Peso Devaluation Against US Dollar
Milei commenced the cleaning exercise with the Peso devaluation as he slashed the fiat currency’s value by 50% in relation to the United States Dollar (USD). Therefore, the Argentine Peso is now valued at 800 per USD as against the previous value of 400 Peso per USD. This further underscores Milie’s mission to dollarize Argentina’s economy, a massive deviation from the objective of the BRICS Group which recently extended an invitation to Argentina.
The Peso devaluation implies that the Argentine president is bringing the government’s official valuation in line with that of private markets. At a point in time, pesos traded higher than 1000 per USD in some of these private markets.
Meanwhile, the current administration led by Milei, has not made any effort to remove the capital controls that made it possible to cap the Peso at the 400 rate. Markedly, this was imposed by the previous government.
The country has also seen some spending cuts in government activities. For instance, government advertising will not be authorized for the next one year, contracts that are currently not up to a year will not be renewed, the subsidies for public transportation will be reduced, and electricity, gas, and water subsidies will also be canceled.
No Bitcoin Integration in Argentina for Now
With these changes, many crypto enthusiasts had expected Milei to immediately turn to Bitcoin (BTC) which he always talked about during his campaign. He, however, seems to have disappointed these observers who saw this new development as a perfect avenue to push his interest in the flagship cryptocurrency into official government policy.
Milei mentioned several lofty plans during his campaign to become the President of Argentina and it looks like he has hit the ground running already. He once said he had plans to scrap Banco Central de la República Argentina (BCRA), the country’s central bank. For him, the closure of BCRA is “not a negotiable matter.”
In the meantime, it’s not yet clear if Milei will scrap the apex bank or turn to Bitcoin as projected.
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