Argentina's Peso Undergoes Drastic Devaluation as Milei Initiates 'Shock Therapy'

Argentina's new government plans to devalue its currency by more than 50% against the US dollar in an attempt to address the country's severe economic crisis. President Javier Milei calls this move "economic shock therapy." Economy Minister Luis Caputo also announced significant cuts to public spending, including reductions in fuel and transport subsidies, freezing spending on certain government contracts and advertising. Caputo admits that he has inherited the country's worst economic legacy and is taking steps to prevent hyperinflation. The measures come in response to Argentina's skyrocketing inflation, high government debt, low cash reserves, and a large percentage of the population living below the poverty line. The International Monetary Fund (IMF), to which Argentina owes $44bn, supports these actions, stating that they will create an environment for private sector growth. The exchange rate will be lowered to 800 pesos to the US dollar, compared to the current rate of roughly 391 pesos. President Milei, a libertarian, campaigned on promises of significant spending cuts and has already reduced government ministries in an effort to decrease the public sector workforce. The effectiveness of these measures in stabilizing the economy without causing further turmoil remains uncertain.