Argentina devalued the peso by 18% to 350 per US dollar on Monday 14 August and announced that it will raise its key interest rate by 21 percentage points to 118%, after Javier Milei, a radical libertarian and outsider candidate, unexpectedly won Argentina’s primary poll with 30.1% of the vote.

Investors took fright after Milei, who threatened to “burn down” the central bank, came first in the primary. Congressman Javier Milei, a far-right libertarian who wants to axe the central bank and dollarize the economy, shook up the race towards presidential elections in October by far outperforming forecasts to win some 30% of the vote, the largest share with over 97% of ballots counted.

Markets were betting on a strong performance by more moderate candidates in a ballot that acts as a dress rehearsal for the national election in two months' time.

The official FX rate will be fixed at 350 pesos per dollar until the October elections, the central bank said. The parallel informal peso dropped near 10% to a record low of 670 per dollar in early trading.