Javier Milei, the outsider who has won the primaries by a landslide in Argentina, he is now the favorite in the presidential elections on 22 October, but in the meantime he is already turning the already very fragile financial structure of the South American country into disarray.
Milei's victory in the primaries
The anarcho-capitalist, as he likes to define himself, obtained the preference of one Argentine out of three a month ago, consecrating himself as the right-wing candidate, who will challenge the outgoing majority, the Peronists led by the current Minister of Economy Sergio massa. However, Milei represents the more extreme right, the populist and sovereignist one, anti-Mercosul and even anti-China, which proposes the totaldollarization of the economy Argentina and even more austerity compared to the already quite "IMF friendly" recipes of the outgoing government.
His figure recalls that of leaders like Trump and Bolsonaro, absolutely elitist in political orientation but paradoxically representatives of the most disadvantaged groups and very quick to be ready to give answers to the anger against social inequalities.
Milei remembers Trump and Bolsonaro: the exchange rate with the dollar goes crazy
If a good morning starts in the morning, however, the Milei recipe is destined not to work: after the primaries of August 13th, the exchange for the dollar – both official and parallel, the so-called “blue” – exploded to all-time highs. The official one jumped above 350 pesos at the end of August, from 288 at the beginning of the month, while the "blue" one reached almost 800 pesos, stabilizing in the first week of September above 700 pesos, from 605 the week before the vote.
Abnormal values, which had immediate and dramatic consequences in the real economy: the supermarket shelves in Buenos Aires and its surroundings, in recent weeks, have begun to empty, in particular the departments intended for products such as drinks, rice, flour, even the much appreciated mate, the Argentinians' favorite drink. In short basic necessities, especially imported ones, of which many shops have no longer been able to stock up due to the speculative strategy of various companies, which, noticing an upward trend in prices, are waiting before delivering the products, so as not to sell them at a less convenient value than what they it could be a few days or a few weeks later.
Milei hawk on inflation
In Argentina inflation it has been a problem for decades, but in the last phase of the Fernandez government it rose to record levels, reaching 115% on an annual basis this year in June. In this case Milei has little to do with it, but unlike his challenger Massa - who is doing everything to convince the International Monetary Fund to grant new financing and who negotiates day and night with companies to contain inflation (which in fact slowed down in July) – has a hawkish attitude: he wants close the Argentine Central Bank and officially adopt the dollarwith no middle ground.
The financial markets are obviously skeptical: the Financial Times wrote that in recent weeks hedge funds have increasingly bet against Argentine stocks, reflecting a negative climate. Argentina is exposed to bonds with foreign banks for $41 billion: before the primaries there were 25 billion.
