Buenos Aires [Argentina], December 13 : Argentina will devalue the peso by more than 50 per cent as part of emergency measures to help the nation's struggling economy, the country's Economy Minister Luis Caputo announced on Tuesday, CNN reported.
The move changes the dollar conversion rate to 800 pesos per dollar from 365 pesos and comes just days into President Javier Milei's term.
Milei campaigned on a pledge to get rid of the peso and replace it with the dollar in order to get the economy back on track. The peso has been artificially supported for years by strict capital controls, and its value has plunged roughly 52 per cent this year against the US dollar, as per CNN.
In recent years, Argentina's central bank has printed more of the peso to help the country's government avoid defaulting on its debt. That has resulted in skyrocketing prices.
The move marks the first of several steps to tamp down that hyperinflation, which led Argentina's central bank in October to raise its benchmark interest rate to 133 per cent.
On Tuesday, Caputo reiterated Milei's campaign theme that "there is no money" as he outlined other measures, including a cut to new public works projects, plans not to renew labour contracts that have been in effect for more than one year and reducing energy and transportation subsidies.
"For a few months, we'll be worse off, particularly with inflation," he said, as per CNN.
Regarding public works, Caputo said that "there's no money to pay for works that often end up in the pockets of politicians and business people."
Following Caputo's remarks, the International Monetary Fund said it supports the new initiatives.
IMF director of communications Julie Kozack said in a press release: "IMF staff welcome the measures announced earlier today by Argentina's new Economy Minister, Luis Caputo. 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."
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