Factor Capital

Argentina was in disarray yesterday as the peso hit a record low against the dollar and far-right libertarian Javier Milei won a shock primary election victory. The peso closed at 280 to the dollar, its lowest level ever, as investors continued to worry about the country’s economic outlook. Inflation has soared and the government has struggled to meet its debt obligations.

Milei’s victory was a major upset. He is a former economics professor who has called for the abolition of the central bank and the dollarization of the economy. He won 17% of the vote, ahead of ruling coalition candidate Alberto Fernandez (13%) and opposition candidate Mauricio Macri (11%).

The election results are a sign of the deep dissatisfaction with the country’s political establishment. Fernandez and Macri are both unpopular, and Milei’s victory suggests that there is a growing appetite for radical change. It remains to be seen whether Milei can translate his primary election victory into a win in the general election in October. However, his performance yesterday has certainly shaken up the race and made it more unpredictable. The government announced a new plan to tackle inflation, including price controls and subsidies for essential goods. However, economists have expressed doubts about the plan’s effectiveness, given the government’s track record of failing to control inflation. The country’s unemployment rate remained unchanged at 7.3% in the second quarter of 2023. However, the number of people underemployed increased by 0.6% in the same period. The government said it would increase spending on education and healthcare in the coming year. However, it remains to be seen how the government will finance this spending, given its already high debt levels.

Overall, it was a turbulent day in Argentina yesterday, with the peso hitting a record low and the country’s political landscape shaken up by a surprise primary election victory for far-right libertarian Javier Milei. It remains to be seen how the country will weather this storm, but one thing is for sure: the next few months will be critical for Argentina’s future.

¿What is the Effect of the Dollar Surge on Inflation?

Within the realm of financial analysis, the surge in the value of the dollar has stirred considerable attention towards its potential ramifications on inflation dynamics. Esteemed market observers are unanimous in their projection that this profound currency fluctuation is poised to amplify the existing pressure on inflation, which had already exhibited signs of gaining momentum. Notably, financial experts are entertaining the possibility that inflation might ascend to double-digit echelons during the forthcoming months of August or September. This paradigm shift in exchange rates undeniably introduces an intriguing juncture for assessing the intricate interplay between currency valuation and economic metrics.

The article was written by the News Team at Factor Capital Mexico | Latin America with Bloomberg Support. Factor Capital Mexico | Latin America is committed to providing reliable financial reporting and analysis to keep its audience informed on the latest market trends and business developments.

Email: contact.support@factor-capital.com.mx