[1/3]Supporters of Argentine presidential candidate Javier Milei hold dollar bills with his face on them, during a campaign rally, in Buenos Aires, Argentina September 25, 2023. REUTERS/Cristina Sille/File Photo Acquire Licensing Rights
MAR DEL PLATA, Argentina, Oct 6 (Reuters) – Corporate Argentina is strongly against full dollarization of the economy, one of the key proposals of presidential election frontrunner Javier Milei, according to 125 business people Reuters spoke to.
At a major corporate summit in the seaside city of Mar del Plata, Reuters asked business executives from a wide array of sectors whether they wanted the government to stick with the peso, change to a dual peso-dollar system or make a total switch to the dollar. Only two people backed full dollarization.
The survey gives the clearest and most in-depth view yet on how corporate Argentina sees the dollarization debate, which is at the heart of the election race towards the Oct. 22 vote.
Some two-thirds of those Reuters spoke to supported a bi-monetary system proposed by conservative candidate Patricia Bullrich, who is popular with business leaders but lagging in wider opinion polls. Almost a third favored sticking with the peso, despite its recent slide and triple-digit inflation.
“It is really challenging for companies based in Argentina to think about dollarization,” said one senior auto sector executive who asked not to be named, citing issues faced by other dollarized economies like Ecuador and El Salvador.
“We are left without an anchor to adjust monetary variables and the experiences in other countries have not been good.”
The strong corporate opposition underscores one of the challenges a potential future president Milei would face in pushing through his plans for the economy, which also include eventually shutting the central bank.
Rival candidate Sergio Massa, the ruling coalition’s economy chief, supports sticking with the peso, but has struggled to bring down inflation or arrest depreciation.
Argentines will vote on Oct. 22, with a run-off a month later if no candidate wins outright, meaning getting 45% of the vote or 40% with a 10-point lead.
Most business people surveyed at the IDEA business summit said it was important to keep the peso to be able to adjust monetary variables and maintain competitiveness. A full switch to the dollar would mean losing monetary policy levers.
In the survey, some 80% said they would prefer a Bullrich government, backing her plans to normalize the economy. Some 11% leaned towards Massa and just 7% were in favor of Milei.
Most of those surveyed put the peso’s real value at between 650 and 1,000 per dollar, far weaker than the controlled official rate of 350 pesos. The country has strict capital controls limiting official foreign exchange trades, which has stoked popular parallel markets.
Reporting by Jorge Otaola; Editing by Adam Jourdan and Rosalba O’Brien
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