Peso posts sharpest weekly fall since Milei took office

Argentina’s peso fell 5.49 percent against the US dollar this week, closing at 1,467.41 after days of volatility on the currency markets.

Markets reacted sharply to the ruling party’s defeat in last weekend’s elections for the Buenos Aires Province legislature. The nation’s currency posted its steepest weekly loss since the devaluation of late 2023, when President Javier Milei took office.

The peso plunged Monday after the ruling coalition lost by almost 14 points to the Peronist slate of candidates of opposition Governor Axel Kicillof.

The defeat raised doubts about the government’s prospects in the October 26 national midterm elections, given its clear defeat in the nation’s most-populous province.

Milei’s La Libertad Avanza is a minority force in both houses of Congress and needs greater representation to advance the head of state’s reform agenda.

The exchange rate ended the week near the upper limit of the government’s floating band, set at 1,471 pesos per dollar.

Since Monday, the government has intervened in the foreign exchange market using Treasury funds to support the currency.

Argentina’s US$20-billion agreement with the International Monetary Fund (IMF), signed in April, restricts interventions by the Central Bank while the peso remains below the upper band.

August’s inflation index, at 1.9 percent – the same as in July – did little to calm market concerns, with many analysts warning that the peso remains overvalued.

Shares of Argentine firms listed on Wall Street lost up to 30 percent during the week, while the Merval index on the Buenos Aires Stock Exchange fell 11.9 percent.

Investor unease has been heightened by a developing corruption scandal implicating the President’s sister, Karina Milei, who also serves as his chief-of-staff.

Adding to tensions, Congress this month overturned Milei’s veto of increased funding for disability programmes – the first time lawmakers have reversed a presidential veto since he took office.

Next week, lawmakers will debate two further vetoes, covering financing for children’s hospitals and state universities.

– TIMES/AFP