Argentina's Newly Elected President to Devalue Currency by Over 50% Against US Dollar

The newly elected government of Argentina plans to devalue its currency by more than 50% against the US dollar. Authorities say that this is part of a "shock therapy" strategy that they hope will help avoid hyperinflation in the country.

The exchange rate will decrease from 391 pesos per US dollar to 800, said Economy Minister Luis Caputo. Newly elected President Javier Milei stated that Argentina needs "economic shock therapy" to overcome its worst crisis in decades.

As part of the shock measures, the government will also significantly cut public spending, as announced by the Economy Minister. This includes reducing fuel and transportation subsidies, as well as freezing expenditure on certain major public contracts and advertising.

Caputo explained the need for such measures, stating that he inherited the worst economic situation in Argentina's history and is thus trying to prevent hyperinflation. However, he cautioned that the country's economic indicators will continue to deteriorate for months, "especially in terms of inflation."

"And I say this directly, because, as the president says, it is better to say an uncomfortable truth than a comfortable lie," Caputo emphasized in his televised address.

Inflation has become a major issue in Argentina, with prices rising by nearly 150% over the past year. At the same time, the country has low cash reserves and high public debt, while 40% of the population lives below the poverty line.

Economist Javier Milei, who won Argentina's recent presidential elections and describes himself as an anarcho-capitalist and libertarian, warned in his inauguration speech that the country will face harsh austerity measures.

"Unfortunately, I must say again - there is no money. The bottom line is that there is no alternative to austerity, and 'shock therapy' has no alternative. We know that the situation will worsen in the short term. But then we will see the fruits of our efforts," said Milei.

The head of the International Monetary Fund (IMF), to whom Argentina owes $44 billion, referred to the newly promised shocking measures by the government as "brave" and stated that they should help create a favorable environment for the growth of the private sector.

"I welcome these decisive measures. This is an important step toward restoring stability and revitalizing the economic potential of the country," said Kristalina Georgieva.