The crisis of $ Libra and its impact on the economic plan of Javier Milei: the factors at risk

The Argentine economy It crosses a complex period, with various factors that affect the stability of the economic plan promoted by the president Javier Milei. At a time when the Financial Front was complicated, with the fall of the shares, the bonds, and rises from the country risk, now the Crypto scandal for the token $ libra promoted by the mandatory, which hit the heart and confidence in local assets.

This project, initially seen as an innovative proposal and then as a great scam, became an earthquake in which the government still fails to do. The episode affected the perception of investors both locally and internationally.

The situation became even more delicate by observing the abrupt falls of Argentine actions on Wall Street on Tuesday, which collapse more than 6%. This fall reflects the generalized nervousness in the markets, which they see in the promotion of $ libra a reflection of the political and economic instability facing the country. In addition, the bond market is no stranger to this negative trendwith a substantial increase in country risk, which raises concerns about Argentina’s capacity to fulfill its international financial commitments.

The impact of the pound crisis It is not limited only to the markets of shares and bonds. The exchange rate has also been affected, with an increase in the value of the dollar in the exchange market. The MEP dollar, for example, rose 2.2%, while the informal dollar also experienced an increase, reaching 1235 pesos in the exchange houses.

The impact of $ libra on reservations

This increase in the exchange rate reflects the growing uncertainty about the stability of the local currency and the expectations of devaluation, exacerbated by the political instability generated by the cryptocurrency scandal. In this context, the Central Bank It is forced to intervene with the sale of reserves to contain the pressure on the dollar, which in turn limits the margin of maneuver of the monetary authority and increases the risk of exhaustion of reserves.

And the agreement with the International Monetary Fund (IMF)on which the Minister of Economy, Luis Caputo, tried to convey a message of calm, highlighting the advances in negotiations with the body (IMF). According to his statements, the agreement with the agency is in its final phase and the amount and terms of disbursement are being negotiated.

However, the situation seems more complex than Caputo tries to see. On the one hand, the negotiation with the IMF remains a issue of uncertainty, and although the government ensures that an understanding of the exchange scheme will be achieved, the scandal generated by the cryptocurrency has generated more noise in the conversations, which could delay or complicate the closure of the agreement. The details about the use of funds sent by the IMF also remain an unknown, and the lack of clarity about how these resources will be managed distrust both markets and public opinion.

The Government, on the other hand, reacted with closed defenses, not only of economic management, but also of the promotion of $ LIBRA. Caputo’s response was to minimize the impact of the scandal, insisting that the project should not tarnish the economic advances achieved by the government. However, the reality is that the pound crisis has unleashed a series of reactions both inside and outside the country. The creation of a special unit in the Anti -Corruption Office to investigate the case has only increased doubts about the transparency of the process, which adds to the growing lack of credibility in the economic management of the government.

This set of factors – the fall of local assets, the increase in country risk, tensions with the IMF and direct impact on the exchange rate and reserves – is strongly hitting the heart of the Milei economic plan. What began as a promise of radical change for the Argentine economy now faces a series of challenges difficult to overcome, with an increasingly distrustful market and with the internal tensions between the Executive and international organizations, such as the IMF, which could hinder The advance of the necessary agreements to contain the crisis.