Part 5/9:
Another critical facet of Argentina’s economic adjustment is the devaluation of the Argentine peso. In December 2023, Milei devalued the official exchange rate from around 350 pesos to 800 pesos per US dollar to align it more closely with black market rates. This structural change aimed to bring stability to the currency and curb the discrepancies between the official and black market rates, which previously stood at 1,000 pesos to one dollar.
The devaluation process has included the introduction of a monthly “crawling peg,” with the rate of devaluation recently adjusted from 2% to 1%. This change indicates a move towards stabilization, although the breathing room provided by a milder devaluation will require monitoring to ensure it does not hinder economic recovery.