The government explained why it went from rejecting the Argentine peso to saying it would be a “stronger currency”

A lot of “water under the bridge” has flowed since then Xavier Miley In October last year – in the midst of the election campaign – it was announced that “Peso is a currency issued by Argentine politicians and it can’t even be worth as much as excrement. I say this historically. History supports me, the only period in which there was low inflation was during convertibility, during the validity of the BCRA…. I mean, the madness is not eliminating the Central Bank, the madness is eliminating it.”

The reality is that since the liberal leaders came to power, the Argentine peso is the currency that has appreciated the most in real terms due to a policy of gradual devaluation, at a much lower rate than inflation, which is at its highest level in 33 years.

In this context, the President’s Spokesperson Manuel Adorni He said this Friday that the Argentine economy “is moving towards a competition of currencies with a stronger peso, based on the fact that the currency issuance was definitely planned.”

The presidential spokesman’s message came just hours after the Economy Minister, Louis Caputothe former Twitter expressed on his social network account “X” that “the pesos issued are for purchases in the MULC (Single and Free Exchange Market, as the official wholesale market is called).” The objective was always to deregulate the peso market. I’ve been saying it since the first interview, but some people are still not convinced. The reality will soon prove it People will have to sell dollars to pay taxes and the peso is going to become a strong currency,

Spokesman Adorni said: “What else has changed with regard to the Caputo definition versus the definition of weight in terms of feces? Well, actually what the president of the nation said at the time was absolutely correct. The weight was excrement because they considered it as excrement to weigh in. When on one side you have people who lack common sense and good judgment, a banknote-making machine is flooding Argentina with pesos that are obviously worth less and less.

“In fact, the scenario that the president proposed at the time, at the beginning of his administration, and that we saw before the inauguration, was hyperinflation with figures that the president himself disseminated based on an estimated 17,000% inflation (annualized). On wholesale inflation in December, at an estimated 54% for one year, he said the peso was excrement,” he argued.

“What happened next was the Eastern government, which put everything in place as quickly as possible for seven months – the work is not finished yet, as was said in the report itself before the ‘putsch’ – and what changed was that. We had always said that we were going to move to a currency competition plan and, within that currency competition, the peso is of course going to be an option like any other option, so what changed fundamentally was that From excrement pesos to lack of pesos, what was in between was us

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Adorni explained that “Minister warns of increased competitiveness of currencies with strong peso which arises based on the fact that The broadcast was definitely planned of currency. The monetary issue in the Argentine Republic disappears, which means that this peso, the amount, will be fixed and what will happen in such a situation future growth of the economy That is, the greater the need for money, and a certain amount of pesos, the more effectively will happen to you Areas where the dollar is or that they’ll get the dollars they need to do it Sell ​​them to pay taxes. I think Minister Caputo was talking about paying taxes. If you don’t have dollars, you don’t have dollars, what do you do, that’s how life is.”

In another order, Caputo celebrated the progress in the “migration towards a new monetary plan after agreeing with banks to repurchase $ 13.17 trillion in the hands of financial entities” and which posed the risk of a massive monetary issue. Starting this week, the minister launched a “zero emission” plan in collaboration with the Central Bank, which aims to make the issuance of pesos for foreign currency purchases null and void in order to maintain reserves through interventions in cash dollars with settlements that reduce exchange differences.

As the peso began to stabilize after the December 2023 devaluation, That’s an increase of about 50% after adjusting for inflation, An indicator that Argentine investors follow closely as it measures changes in the real purchasing power of the currency.

Since Javier Miley took office, inflation has risen by 125%, while the wholesale dollar rose by 15.9% until December 13 – when there was a jump in the exchange rate that pushed the official exchange rate up by 800 pesos -, from 799.95 to 927 pesos. This means that The purchasing power of the dollar declined by 48.5% during this period in the domestic economy during this period. Or, what is the same, it is the same Peso recorded real appreciation of 51.5% Because of the depreciation rate – which runs at 2% per month – it is much lower than inflation.