Milei fires Cavallo’s diplomat daughter after peso criticism

President Javier Milei fired the daughter of a famous economist just days after he published a critical blog post about the libertarian’s currency policy.  

Milei removed Sonia Cavallo as Argentina’s ambassador to the Organisation of American States in Washington, his chief spokesman said Monday in a post on X. 

Domingo Cavallo, the Argentine economy minister from 1991 to 1996 who crushed hyperinflation, ranks among the country’s celebrity economists today and remains well regarded among the business elite.  

Milei called Domingo Cavallo “disgraceful” in an interview on media outlet A24 news channel Monday morning after the former minister's recent criticism of Argentina’s currency policy. 

During his tenure, Cavallo tied the peso to the US dollar in a policy known as convertibility, which ultimately ended in the 2001 financial crisis. 

“This programme is much more successful than convertibility was,” Milei said during the interview, pointing out his administration didn’t depend on hyperinflation to carry it out, and has remained committed to a fiscal surplus while cutting taxes. In the mid-1990s, “when Argentina suffered the negative external Tequila shock, Mr. Cavallo, who likes to talk so much, how did he fix it? He raised taxes.”

In a January blog post, Cavallo said Milei’s currency policy — a carefully controlled peso depreciation — has led to an “exaggerated appreciation” of the real peso that is draining the Central Bank’s net reserves. Last week, Cavallo pointed out that even a large upfront disbursement from the International Monetary Fund would be insufficient to bring reserves up high enough to lift capital controls.

Milei’s government inherited currency controls that it tightened last week. Officials now let the peso depreciate one percent a month from the prior two percent pace, which is well below the rate of inflation. The mismatch between price increases and the currency’s slide has led economists across the board to debate about the peso’s value and consequences of Milei’s controls. ​