Argentina Devalues Local Currency, Cuts Subsidies Amidst Economic Crisis

Argentina Devalues Local Currency, Cuts Subsidies Amidst Economic Crisis Javier Milei Argentina news today
Javier Milei
Argentina's government has taken a drastic decision to absorb its worst economic woo over the decades. The decision taken by the Argentina government includes devaluation of the South American country’s local currency, Peso, against the United States of America’s dollar.

With this development, Argentina’s peso will now be exchanged at 800 to one dollar. Argentina's peso, before now, was exchanged at 400 peso to one U.S. dollar but the exchange rate seems to have contributed to the economic uncertainty facing the country. This brings the country’s current “nearly to being floated” so it could form a convergence with the black-market FX rate.

Also, in what the Argentina authority described as “Economic shock therapy” the country has removed parts of the subsidies it pays to enhance “price control” in the country’s market. Likewise, Argentina has canceled public works tenders which was part of what the country’s authority believes add to the government’s costs, although it was meant to relieve the masses.

Reacting to the economic development of the South American country, some economists have argued that the economic decision will surely cause the country a “triple-digit inflation” that will continue to hit the consumers in 2024 although the economic decision tends to lay a foundation for the future growth of Argentina.

Nevertheless, some economists argued that the country desperately needs an adjust to the economic decision in 2024 once the country begins to export its Soyabeans during the harvest period which is believed to replenish the country’s Foreign Reserve. They argue that the new economic decision should move the country, totally to a “unified exchange rate” regime.

Reacting to the decision taken by Argentina’s Central Bank, the International Monetary Fund (IMF) hailed the decision reached by the administration of President Javier Milei who was sworn into Office on December 10th, 2023.

IMF said "These bold initial actions aim to significantly improve public finances in a manner that protects the most vulnerable in society and strengthens the foreign exchange regime. Their decisive implementation will help stabilize the economy and set the basis for more sustainable and private-sector-led growth.

"Following serious policy setbacks over the past few months, this new package provides a good foundation for further discussions to bring the existing Fund-supported program back on track."

Category: World-News
Tag: Argentina Devalues Local Currency Cuts Subsidies Amidst Economic Crisis Javier Milei Argentina news today
Written by Author (author)
Published 12/13/2023 4:49:29 PM


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