Argentina’s inflationary problems have been a well-known issue for years. But one thing surged at a faster pace than inflation over the last decade: the value of the U.S. dollar in Argentinian pesos.
That meant that tourists who arrived in the country with greenbacks in their pockets could sell them on the streets in exchange for giant wads of pesos, enough to enjoy a luxurious Buenos Aires vacation. But that reality is now rapidly changing.
Since Javier Milei’s presidential victory in November, the free-market exchange rate for the U.S. dollar has remained unusually stable, floating slightly above the ARS 1,000 per USD 1 mark over the past few months.
Inflation, however, has soared from day one. The libertarian economist wasted no time in implementing shock therapy measures, ending subsidies for importers, and loosening price caps on most goods.
This has led to a rapid increase in the costs of essentials such as food, groceries, health, medication, and transportation, which were artificially suppressed under the previous administration. Since November, the consumer price index has surged by a stunning 93 percent.
The result has been a massive loss of purchasing power for locals and foreigners alike.
Buenos Aires, which had surged as a tourism destination due to convoluted exchange-rate incentives over the last few years, is no longer a bargain for international visitors, as prices have nearly doubled when gauged in U.S. dollars, all in the course of just a few months.
In President Milei’s view, the shock inflationary hikes should be short-term, while the newfound peso strength versus...
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