President Javier Milei outlined the government’s path out of currency controls in greater detail Monday, a policy decision that could have a big impact on his wavering approval ratings.
In his Wall Street debut as president, Milei told investors at the New York Stock Exchange restrictions would be lifted “when the rate of inflation in the macroeconomic programme is zero,” according to a transcript of his remarks sent by his press office hours after the event.
He didn’t specify when that would be exactly.
Then the libertarian economist clarified his thinking. He explained that monthly inflation today is actually around 1.5 percent if you subtract the impact of “induced inflation” on Argentine prices from the current headline figure of around four percent. He listed international inflation, the crawling peg currency devaluation and capital controls as driving factors of the phenomenon.
“When that 1.5 percent disappears,” Milei said, “the money overhang will have disappeared and, without any problem, we’ll be able to open up the currency controls.”
Presidential spokesman Manuel Adorni didn’t reply to a request for comment on the president’s remarks.
Economy Minister Luis Caputo, who is accompanying Milei in New York, had previously said Argentina plans to return to markets in early 2026, making next year pivotal for policy changes ahead of mid-term elections expected in October.
Investors are closely watching for signs of Argentina’s exit from currency controls since it’s a key step before the government returns to international debt markets, from which it’s been effectively locked out since a sovereign default in 2020. At the same time, lifting controls is politically risky since past presidents were voted out of office after they abruptly devalued the peso, fuelling higher inflation.
Argentines enduring another grueling recession this year are growing increasingly impatient with Milei. Although still high historically, the president’s approval rating ticked down in September to 53 percent while his disapproval rating rose four percentage points to 47 percent, the highest since he took office, according to the latest monthly poll published by Buenos Aires-based consulting firm Poliarquía.
With inflation cooling dramatically on Milei’s watch, Argentines now see unemployment — not price increases — as the country’s biggest problem, according to the survey. Nearly half of respondents said their incomes aren’t enough to make it to the end of the month.
Milei, who met with Tesla Inc Chief Executive Officer Elon Musk in New York later Monday, is due to speak Tuesday at the United Nations General Assembly.
by Patrick Gillespie & Manuela Tobias, Bloomberg
Comments