The devaluation that had been planned for weeks or even months was finally announced on Monday, August 14, the day after the presidential primary elections that were marked by far-right candidate Javier Milei's spectacular breakthrough. Following the central bank’s adjustment, the peso lost 18% of its value in the biggest one-day devaluation of the official rate since 2019.

The government of Alberto Fernández (center-left) had previously opted for regular micro-devaluations to avoid the surge in prices that usually accompanies a sudden loss in the value of the currency. It is the last thing Argentina needs at this time, as the country is already coping with some of the world’s highest inflation, and the highest in 30 years (113% year-on-year). But the official exchange rate, whose value is artificially boosted by a series of exchange controls, was becoming untenable. The gap with the parallel rate – the "fair" value used by economic players to draw up quotations or denominate prices that are largely dollarized – had been constantly widening.

According to the estimates of private firms, net foreign exchange reserves, which the central bank does not disclose, were in the red by between - $8 billion to - $10 billion (- €7.3 billion to - €9.2 billion). The reserves have been constantly declining, making it no longer possible to keep the peso’s previous value afloat. As a result of the devaluation, the parallel market became nervous and the currency plummeted. On Wednesday, one dollar was worth a record high of 775 pesos.

Price variations are not limited to financial transactions and also affect the daily lives of Argentines. On Wednesday, the window of a butcher’s shop in the capital, Buenos Aires, showed large chalkboards displaying "roast beef," "minced meat," "veal" and the peso symbol but with no prices indicated. Inside the shop, cuts were also presented without signs.

"Since Monday, prices have only gone up. I prefer to wait for things to stabilize before listing them," said the owner Ruben Quiroga. Arms crossed on his white apron, he waited for customers. "It’s quiet. People don’t want to buy. The suppliers have raised my prices by around 40% since Monday. I’m left with no choice: Take it or leave it!" A customer finally came in, asking about the price of a kilo of minced meat, which the butcher said was 3,000 pesos, or €7.90 at the official rate. "I know, it’s crazy," the butcher said. A kilo was worth only 2,000 pesos four days earlier.

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