This policy by Milei is not fundamentally different from Massa’s earlier strategy of printing pesos to finance dollar futures. Milei is tackling the same issue from the opposite angle—absorbing excess pesos in order to reduce pressure on the exchange rate. However, this approach risks creating future challenges for the Treasury, which will face increased peso issuance to cover the very high interest costs associated with these “super tasa” rates.
The broader consequence of this policy is the sharp contraction in affordable credit for small businesses. Already struggling with declining demand and rising costs, these firms now face prohibitively expensive financing because the higher BCRA rates set the minimum benchmark for lending institutions when originating new loans.
Ultimately, while these measures may buy time until the elections, they do so at the expense of domestic businesses, whose consumers increasingly prefer to spend abroad.
