Argentina's peso dropped more than 50% to 801 to the dollar on Wednesday as markets cautiously welcomed the first details of President Javier Milei's plans to shock Argentina's beleaguered economy back on track. The libertarian president's administration swept to office with promises of drastic economic changes to tackle negative reserves, inflation above 100%, and years of economic stagnation.
The rapid devaluation follows a raft of changes unveiled late on Tuesday by Economy Minister Luis Caputo, including a more than 50% cut to the official peso rate, slashed energy subsidies, and canceled public works tenders.
"The news is positive," said Argentina expert Bruno Gennari at KNG Securities. "It is a massive fiscal effort, with 3 ppts of GDP of spending cuts and 2.2% of additional revenues." International sovereign dollar bonds gained more than 2 cents to trade between 35.7-41.25 cents on the dollar, many at their highest level since 2021. U.S.-listed shares of Argentinian state oil company YPF rose around 1% in premarket trading.
