Argentina's peso sinks after presidential candidate who wants to dollarize economy pulls off shocking primary win

• Argentina's peso sank 20% against the dollar after Javier Milei's surprise primary victory.
• The presidential candidate has called for ditching the peso in favor of the dollar to rein in inflation.

Argentina's peso sank Monday after presidential candidate Javier Milei pulled off a shocking primary win on Sunday.

The far-right libertarian economist and congressman has called for Argentina to ditch the peso and official adopt the US dollar as its local currency to rein in inflation, which is running at over 100%.

In the primary, Milei got about 30% of the vote to lead the field, ahead of October's election which will feature a three-way race. A runoff in November is also seen as likely.

The country's central bank lowered the official exchange rate, sending the peso down 20% to about 350 per dollar. Meanwhile, the black-market exchange rate also dipped and was 600 pesos per dollar, according to reports.

The central bank will also boost the benchmark interest rate to 118% from 97%, according to Reuters, but Argentina's dollar bonds still fell about 10%.

Argentina is in the midst of a $44 billion International Monetary Fund rescue approved last year to refinance a 2018 loan. But the central bank is running low on reserves, and the economy continues to deteriorate while inflation spirals higher.

Cash has turned so scarce that Argentina has tapped a swap line with China to gain access to the yuan.

Adopting the dollar as the national currency would mark a radical departure from Argentina's and other countries' efforts toward dedollarization, which has largely focused on using currencies other than the greenback for international trade and reserves.

In April, Argentina said it would start buying the bulk of its Chinese imports in yuan instead of dollars. And in January, Brazil and Argentina said they were preparing to launch a joint currency.

Despite those efforts, Argentine consumers are already using US dollars in day-to-day transactions and as a form of savings.