Former Economy Minister Domingo Cavallo joined the dispute with President Javier Milei over exchange rate policy. He also warned about the risk of a devaluation jump if the current exchange rate management continues, which could affect the disinflation process. According to Cavallo, controlling inflation will depend on fiscal and monetary balance, and not necessarily on increasing reserves.
In a tense moment between them, Cavallo criticized the economic strategy of using export currencies to control the exchange gap. He proposed alternatives to increase the Central Bank's reserves without resorting to a sharp devaluation.
On the other hand, Milei rejected the possibility of devaluation and advocated for maintaining a stronger currency. In this regard, Cavallo emphasized the importance of increasing net reserves as a mechanism to avoid future disruptive devaluations.
The debate between them intensified after Milei called for the resignation of Cavallo's daughter as Argentina's representative at the OAS. The differences regarding exchange rate policy and economic stability have generated controversy in the public sphere.
Cavallo emphasized that the evolution of net external reserves will be crucial to avoid devaluation expectations in the future. He also pointed out that the reduction of the crawling peg to 1% has not succeeded in decreasing the monthly inflation rate as expected. The discussion about whether the dollar is lagging or not continues and generates mixed opinions within the Government.
