The black market value of Argentina’s peso plummeted this week in the face of sharp criticism from presidential front-runner Javier Milei, who has promised to eliminate the national currency in favor of U.S. dollars. The peso’s depreciation will only fan the flames of annual inflation that surpassed 124% in August. (El País)
The so-called blue rate, as the informal exchange rate is known, closed at around 1,010 pesos to the U.S. dollar yesterday, a sharp increase from 880 pesos on Friday. The peso plummeted past a psychological 1,000 barrier, just two weeks ahead of the Oct. 22 national elections, in which Milei faces off against the ruling coalition’s economy minister, Sergio Massa. (Reuters)
The peso had already been steadily depreciating for months, but took a sharp downturn Monday after Milei, in a radio interview, recommended that Argentines not renew fixed rate deposits, saying the “peso is the currency issued by the Argentine politician, and therefore it is not worth crap.” (Associated Press)
Yesterday the nation’s largest banking associations urged candidates “to show responsibility in their campaigns and public declarations.”
Milei’s comments are causing “a spike in inflation or an eventual banking problem, which is what he is encouraging,” Marina Dal Poggetto, an Argentine economist and former analyst at Argentina’s Central Bank told the New York Times. “What you are seeing is the beginning of a run that may or may not stop.
Though Milei’s promises of dollarization are tempting for a population afflicted by a constantly depreciating currency, economists broadly agree that dollarization is nearly impossible in the short-run and would imply a cruelly punishing devaluation. There are limited examples of dollarization in the region, and the experiences have been mixed, reports Ambito.
“Milei has said that he will likely need a $40 billion infusion of dollars to switch Argentina’s official currency, though it is unclear he would get that much money. Argentina is already struggling to pay its $44 billion debt to the International Monetary Fund.”
Milei’s push to further destabilize the country’s economy ahead of the elections is politically motivated, argues journalist Iván Schargrodsky in Cenital. The Milei campaign believes he is within reach of a first round victory in October, and is concerned that he could potentially lose in a second round against Massa.
- Dozens of people were evacuated from their homes in Argentina’s central Cordoba province yesterday as wildfires grew amid an intense heat wave, reports the Associated Press.
- Indigenous Amazon communities asked Brazil’s government to declare a climate emergency as their villages have no drinking water, food or medicine due to a severe drought that is drying up rivers vital for travel in the rainforest, reports Reuters.
- “The deadly heat in central South America over the past two months was made 100 times more likely by human emissions that disrupted the climate,” reports the Guardian. “Temperatures have exceeded 40C in late winter and early spring in the southern hemisphere, affecting millions and leading to heat-related deaths.”
- Government backtracking on environmental promises is being driven by politicians and vested interests, not the public, David Cooper, acting UN biodiversity chief told the Guardian, as he called for greater support for those experiencing short-term costs from green policies.
- “The number of leaders murdered in Cauca, Colombia shows that their work is an obstacle for armed groups seeking to consolidate control in one of the most strategic territories for organized crime in the country,” reports InSight Crime.
- Ecuador’s presidential candidates in Ecuador are promising to use the military to crack down on drug exports from the country’s ports, where over half of banana shipments flagged as suspicious and searched by authorities hide packages of cocaine, reports Reuters.
- “The murder of six Colombians and one Ecuadorian suspected of involvement in the high-profile assassination of an Ecuadorian presidential candidate has seen security rhetoric drift to hard-line policies ahead of the October 15 election,” reports InSight Crime. (See Monday’s post.)
- Cuba was reelected to the United Nations Human Rights Council despite criticism from several advocacy groups and activists about the government’s crackdown on peaceful protesters, reports the Miami Herald.
- Dominica’s “golden passports scheme,” one of the world’s biggest citizenship by investment programs, has officially raised more than $1 billion since 2009 — a former Afghan spymaster, a Turkish millionaire convicted of fraud and a former Libyan colonel under Muammar Gaddafi are among the thousands of individuals who purchased citizenship, according to a new investigation by the Guardian and 14 other international news organisations, in partnership with the Organized Crime and Corruption Reporting Project.
- A former Chilean Army officer accused of torturing and killing the Chilean folk singer Victor Jara and others following the 1973 military coup against Salvador Allende was arrested in Florida. (New York Times)
- A push to make Patois Jamaica’s official language, on par with English, is building as the country moves forward with plans to become a republic and cut ties to the British monarchy. “Long stigmatized with second-class status and often mis-characterized as a poorly structured form of English, Patois has its own distinct grammar and pronunciation. Linguists say Patois, which is also called Patwa, Creole or, simply, Jamaican, is about as different from English as English is from German,” reports the New York Times.