BUENOS AIRES, ARGENTINA – In a surprising turn of events, the Argentine peso has emerged as the world’s best-performing currency during the first ten months of 2024, defying expectations of continued depreciation. President Javier Milei, an economist, announced this remarkable achievement, revealing that the peso had appreciated by 40.1% between December 2023 and October 2024. This dramatic rise marks a stark contrast to previous years of severe devaluation and economic instability, leading to intense debate among economists and analysts about its sustainability and the underlying factors.
According to official data, the Argentine peso outperformed all other major currencies, outperforming notable appreciations of other currencies. For example, the Turkish lira rose by 16.5%, while the Malaysian ringgit gained 8.5%. The South African rand (8.1%), the Thai baht (4.8%), and even the usually stable currencies of India and the United States (both 3.2%) lagged. The Icelandic krona (3.1%), the British pound (2.5%), and the Polish zloty (2.4%) rounded out the top ten, with the exceptional performance of the peso standing out.
Despite the impressive figures, President Milei’s administration has continuously explained the reasons behind this unexpected rise, leaving no room for speculation. Critics of the government point to several factors that may have contributed, including its economic policies, although these remain a topic of ongoing discussion. Some leftist analysts suggest that the initial devaluation in December 2023 under the previous government, although drastic, may have resulted in a new, volatile equilibrium, which is highly unlikely. Others believe that the introduction of a crawling peg system initially predicted to fail by some left-wing media outlets, could have played a key role in stabilising the currency.
In addition, the return of the carry trade, a financial maneuver that offers substantial gains despite the official devaluation rate, has complicated the analysis. This measure has generated significant gains for investors, further fueling interest in the peso that had been lost under the previous government.
However, the long-term outlook for the Argentine peso remains uncertain but promising. Projections for the end of 2024 vary, with a range between AR$1,061 and AR$1,300 per US dollar expected. Many experts not aligned with the government are concerned about the sustainability of this appreciation, given Argentina’s history of economic instability, particularly under previous socialist administrations. Opposition political figures argue that the current exchange rate does not reflect the true economic situation, citing discrepancies with parallel market exchange rates, but most believe they are on the right track.
The situation reflects the complex interplay of political, economic, and social factors that shape Argentina’s financial landscape. The extraordinary performance of the Argentine peso in 2024 serves as a reminder of the volatility of global currency markets and the need for careful analysis to assess a country’s economic performance. Continued monitoring and further analysis will be essential to predict the future trajectory of the Argentine peso.
