Argentina is temporarily banning beef exports as it looks to stabilize the peso

The major beef producer has tightened control over the central bank after a surprise primary win by a right-wing populist candidate.

Argentina announced it was freezing all beef exports for the rest of the month on Tuesday (August 15), less than a day after the government took drastic steps to protect the country’s peso currency.

One of the world’s largest beef producers, Argentina will suspend all shipments while the government negotiates new pricing levels with the meat industry, according to a Bloomberg report.

This decision is part of a series of steps the country has taken to stabilize its vulnerable economy in the aftermath of populist presidential candidate Javier Milei’s shocking primary win on August 13th. 

Who is Javier Milei?

The extremist libertarian politician won 30% of the overall vote—the highest share of any candidate—and has expressed a range of shocking positions, including creating a market for selling human organs and being open to selling children into slavery (a claim he later walked back).

However, it is Milei’s pledge to abolish the Argentinian Central Bank—and consider replacing the peso with the US dollar—that caused the country’s stock market to plummet in the hours following the election results. 

In response to the dramatic market movement, the government devalued the peso by approximately 18%, while interest rates were raised by 21 percentage points, reaching a benchmark rate of 118%. The central bank also announced plans to lock the official currency exchange rate at 350 pesos to 1 US dollar until the election on Oct. 22.

Argentina’s struggling economy helps explain Milei’s popularity

The decision to prematurely devalue the currency helps bring the central bank’s currency exchange estimate in line with the informal market rate of the peso. However, choosing to freeze the current rate for the next few months will likely lead to the currency becoming overvalued once again.

This fiscal push and pull has led Argentina to its worst inflation rate in over 30 years, hitting a 114% annual inflation rate last month. It also explains the rise of a bombastic and populist candidate like Milei. 

The current government’s strategy of simply containing the country’s near-constant economic crisis—it defaulted in 2014, and then again in 2020—has left Argentinians with little trust in their financial institutions. 

This is where Milei’s inflammatory rhetoric has its roots. He sees no other option for Argentina then a dramatic overhaul of the economy. And, for an electorate that has now seen a decade of politicians prop up an economic purgatory, his surging popularity is evidence that a wide swath of voters are beginning to agree.