Argentina: Milei Rejects Free Float of the Peso

Argentine President Javier Milei has firmly rejected the idea of allowing the national currency, the peso, to float freely in the foreign-exchange market. Speaking during an interview earlier this week, Milei explained that Argentina’s economy remains too fragile to withstand the volatility that would likely accompany a fully liberalized exchange regime.

Instead, his government will maintain the current “managed float” policy, in which the central bank carefully guides the peso’s value against the U.S. dollar while gradually loosening some restrictions. This approach, he argued, gives Argentina time to rebuild reserves, control inflation, and reduce its massive fiscal deficit before moving toward a more flexible monetary framework.

The decision marks a pragmatic shift for the libertarian economist-turned-politician, who had previously advocated for radical economic liberalization, including dollarization and the elimination of the central bank. Since taking office, however, Milei has been forced to balance his ideological ambitions with the harsh economic realities of a country struggling with decades of inflation, debt, and political instability.

Economists note that Argentina’s annual inflation rate still exceeds 200 percent, one of the highest in the world, while public trust in financial institutions remains extremely low. A sudden free float could trigger a sharp devaluation of the peso, accelerating price increases and eroding household purchasing power even further. The government’s cautious tone reflects a growing recognition that macroeconomic stability must come before deep structural reforms.

International investors have been watching closely. Argentina is currently negotiating new arrangements with the International Monetary Fund (IMF), and maintaining a degree of exchange-rate control could help demonstrate fiscal discipline and policy predictability—two key concerns for the Fund and potential foreign partners. Analysts say that by rejecting a full float for now, Milei may be seeking to reassure both domestic and global markets that his administration is committed to gradual stabilization rather than shock therapy.

Still, critics within Argentina argue that the managed approach risks prolonging distortions in the economy, including multiple exchange rates and restrictions on access to foreign currency. Supporters counter that stability and credibility cannot be achieved overnight and that Milei’s incremental path offers the best chance to rebuild confidence without unleashing further chaos.

In the coming months, Argentina’s challenge will be to show tangible progress—lower inflation, fiscal discipline, and renewed investment—while carefully managing expectations at home and abroad. The rejection of a free float may thus represent less a retreat from reform than a tactical pause in a long and uncertain road toward monetary normalization.