July 16, 2024

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Luis Caputo takes on Argentina’s worst economic crisis in decades

2 min read

When Javier Milei, Argentina’s radical libertarian president-elect, this week selected Luis Caputo as his economy minister, some investors greeted the news with relief.

Unlike Milei, a political outsider who has had no executive experience and scarce contact with Argentine businesses, Caputo is a known quantity.

The former Wall Street trader ran the finance ministry and briefly the central bank under conservative ex-president Mauricio Macri. Known for opening up the country’s access to credit, Caputo successfully sold a 100-year sovereign bond in 2018.

“For the market, this is like your best friend becoming economy minister,” said Salvador Vitelli, head of research at the Buenos Aires-based Romano Group. 

Yet Caputo will take the reins of Argentina’s economy on December 10 at its most fragile point in two decades. Inflation is running above 140 per cent, foreign currency reserves have been wiped out and economic activity is being hobbled by a labyrinthine set of currency, import and price controls brought in by the left-leaning Peronist government.

Milei’s November election win — on a pledge to rapidly overhaul Argentina’s dysfunctional economy — has triggered a burst of market exuberance. The local Merval stock index is up 28 per cent, while prices for Argentina’s closely watched sovereign bonds maturing in 2030 — some of the most liquid — have risen 22 per cent to 37.2 cents on the dollar.

The rally has been aided, analysts said, by a pragmatic turn from Milei, embodied by his choice of Macri era officials including Caputo, who is not a champion of Milei’s controversial campaign pledge to dollarise Argentina’s economy.

“I think that [the extreme ideas] we have heard in the political campaign may probably never come into place,” JPMorgan Chase president Daniel Pinto, who is from Argentina, told the Financial Times on Tuesday.

“I…



2023-12-02 08:00:02

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