Milei's Bold Idea Passes Test as Argentine Banks Reopen.

Banks in Buenos Aires reopened after the recent presidential election without any issues or rush of withdrawals, contrary to some analysts' expectations. However, financial markets are still factoring in the risks associated with Javier Milei's plans, as evidenced by the low rollover rate of debt instruments offered by the central bank. Despite this, local stocks and dollar bonds rallied as investors bet on Milei's radical economic fixes. Milei has sought to calm markets by promising to meet debt obligations and dispelling fears about governability. While Milei's proposal to replace the peso with the US dollar has gained support, the specific steps and timeline for the transition remain unclear. The nation's currency controls and import restrictions have created multiple exchange rates, and a disorderly transition could lead to hyperinflation and undermine Milei's economic overhaul plans. Bank executives are concerned about potential chaos if there is a wave of cash withdrawals, but major devaluation of the official exchange rate is not expected in the coming days. The central bank plans to take measures to ease pressure on the exchange rate gap during the transition period. Proponents of Milei's plan argue that much of the country is already dollarized to some extent. Confidence in the local currency is low, and the idea of formally switching to the US dollar may not be as radical as it seems. [Extracted from the article]