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Will Argentina Ditch the Peso for the Dollar?June 8, 2023 at 6:00 AM EDT
The Argentine peso has had a tumultuous life. In the 1980s it was temporarily dethroned by a new currency called the austral. An arranged marriage with the dollar in 1991 produced some years of bliss but ended in a ruinous divorce. More recently, the peso has suffered the humiliation of being tagged the worst-performing currency in emerging markets.
Now an Argentine economist running for president is proposing to put the currency out of its misery once and for all. Javier Milei, who’s also a congressman, says that to quash triple-digit inflation, the nation should formally adopt the dollar. “The peso melts like ice in the Sahara Desert,” Milei likes to say, alluding to the currency’s rapid depreciation: It’s lost half of its value against the dollar just in the past year.
If Milei wins the presidency in October and follows through on his pledge, Argentina will become the largest economy to dollarize. Its gross domestic product is about five times that of Ecuador’s, which is the biggest among the seven sovereign nations that have embraced the greenback, according to the International Monetary Fund.
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