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Argentina: Presidential front-runner charged over peso panic

October 12, 2023

Argentina's struggling currency has gone into a tailspin since the election front-runner said it was worthless, vowing to make the economy dollar-driven. Now the president has laid criminal charges against Javier Milei.

Argentine five hundred pesos bills sit underneath United States one hundred dollar bill in this picture illustration taken in Buenos Aires, Argentina November 9, 2021.
The value of Argentina's peso has been plummeting against the dollar, as the man leading opinion polls ahead of this month's election said it wasn't worth excrementImage: M. Baglietto/NurPhoto//picture alliance

The temperature rose in Argentina's already-heated election campaign on Wednesday, as the outgoing president laid criminal charges against the current favorite to take over as leader at the polls this month. 

President Alberto Fernandez said he had reported populist candidate Javier Milei for "public intimidation" after his potential successor said on Monday that the Argentine peso "isn't worth excrement." 

Milei, meanwhile, retorted that Fernandez and the ruling party were "dirtying the electoral process."

A libertarian former economist and media personality known for using strong language and symbolism campaigning, Milei has urged people not to invest in the local currency, saying "never in pesos, never in pesos." 

Presidential hopeful of the Liberty Advances coalition Javier Milei, holds up a giant cardboard depicting a U.S. 100 banknote emblazoned with an image of his face, during a rally in La Plata, Argentina, Tuesday, Sept. 12, 2023.
As Argentina, no stranger to defaults and currency crises, again reels from high inflation, Milei sought to capitalize and said he would move to make the economy primarily dollar-drivenImage: Natacha Pisarenko/AP/picture alliance

In his complaint, published by news agency Telam, President Fernandez invoked a section of the penal code that can punish acts that "inspire public fear or provoke tumult or disorder" by between two and six years in prison.

Fernandez also recommended prosecution of two other members of Milei's populist right-wing La Libertad Avanza (LLA, "Freedom Advances" in English) party, saying the trio combined were directly responsible for the impact on the currency.

What happened to the peso? 

Milei's comments were followed by a dip on the informal "blue dollar" market, where the currency crashed to more than 1,000 pesos to the dollar, a record low, from 880 before the weekend. 

Meanwhile, the official exchange rate has also slipped since Monday, but not as markedly, and sat at 365.50 to the dollar on Wednesday. 

Javier Milei and Sergio Massa shake hands during a debate
Current Economy Minister Sergio Massa (at right) has clashed repeatedly with Milei on the economy and the peso in debates; he's called for presidential candidates to undergo pyschological evaluation before being allowed to take officeImage: Agustin Marcarian/AP/picture alliance

The "blue dollar" is always priced higher than the official exchange rate — how much higher reflects how unstable the public perceives the peso to be at the time.

Recently imposed restrictions on how many US dollars the public can buy, because of a shortage of government currency reserves, have sent the price far higher than the formal rate in recent months. 

How did Milei respond to the charges? 

Milei said the potential charges showed that the powers that be were trying to "ban the most-voted political force" ahead of the first round of the presidential election on October 22. 

Milei was the strongest finisher in August's primary vote, and currently leads in the polls. 

"Let them file all the complaints they want, nothing will prevent the beating we will give them at the polls," Milei said. 

Milei said it was disingenuous to blame him for the state of Argentina's economy as a political newcomer, with inflation at more than 120%, poverty around 40% and a shortage of foreign currency reserves. 

Presidential hopeful of the Liberty Advances coalition Javier Milei brandishes a chainsaw during a campaign event in La Plata, Argentina, Tuesday, Sept. 12, 2023.
Libertarian Milei's call to take a 'chainsaw' to government spending has prompted concerns about implications for Argentina's poorImage: Natacha Pisarenko/AP Photo/picture alliance

Milei has used clear and exaggerated messages during the election. The earlier stage of his campaign was marked by events where he frequently wielded a chainsaw, as supporters yelled "chainsaw." He said that's what he must take to the country's bloated public spending and has also said he plans to abolish or "dynamite" the central bank.

Other policy proposals include banning abortion, liberalizing the sale of arms and opening up a market for the sale of human organs.

Economy minister calls for psychological evaluation of candidates

Also on Wednesday, Economy Minister Sergio Massa, who is the candidate from the ruling party in Argentina, said he would request "a psychological evaluation of the candidates" before any second round vote. 

Worsening poverty in Argentina

He did not name Milei, but said "being president requires a certain emotional stability." 

The other presidential contender, Patricia Bullrich, has also expressed concern about Milei's "emotional instability." 

msh/jsi (AFP, EFE)