A few days ago, Bloomberg published "Javier Milei Fuels Wild Rally That Makes Peso No. 1 in World". Not surprisingly, it triggered the G-spot of Simplified Chinese Milley fans or free market fanatics, such as @Weixin Weiyan.
I have always said that the biggest problem of the public intellectuals of China Simplified Network is stupidity, lack of innate conditions and acquired ability to think independently. They are not told in the Bloomberg headline that this Argentine peso is not the Argentine peso.
In the image above, two of the ones marked brown are both Argentine pesos, one is called Parallel Peso and the other is called Official Peso. To put it bluntly, one is a black market (parallel) exchange rate, and the other is an official exchange rate. The best performer in the world against the US dollar, with a 25% rise in Parallel Peso, while Argentina's official exchange rate continued to fall.
The reason for the rise in the black market exchange rate
Others say that the rise in the black market exchange rate is also a remarkable achievement, indicating that Milley's economic experiment is working. Again, this is silly nonsense.
Is the black market rising because Argentina's inflation is under control? No! Argentina's inflation rate in the past 12 months is 211 percent, three times that of Venezuela, which is often ridiculed by public intellectuals. And even if we look for a derivative of the inflation rate, there is no sign of stalling in the growth rate.
Statistics show that economic activity in Argentina fell 0.2 percent month-on-month and 3.2 percent year-on-year in February. Compared to February 2023, activity in the construction sector plummeted by almost a fifth (-19%). This was followed by financial services (-12.1%), manufacturing (-8.4%) and retail (-5.5%). Only agriculture and mining are on the rise, reconfirming a further recession.
So the most important reason why the black market exchange rate is rising is that it is more than expected. What is more than expected, is Milley's policy towards the Argentine peso is more than expected. If Milley does not lose his memory, it should be recalled that one of Milley's campaign policies was to abolish the official Argentine currency and use the dollar directly. But after Milley came to power, he seemed to have forgotten about it. This has only repaired the black market exchange rate that fell so much during the election.
In other words, the rise in the Argentine black market exchange rate is not some economic magic on the part of Milley, or even less an achievement, but rather a patch for the damage to the credibility of the Argentine currency that he caused in the general election.
Milley fans cheered for this, this kind of IQ should be usually PUA.