In a unique election format, all Argentines on Sunday voted for their favorite among 22 potential tickets, allowing parties to pick their main candidate while providing a key popularity test ahead of an October general election.
The libertarian Milei, a political outsider who has proposed dollarizing the country's battered economy, performed much better than expected, in what local media referred to as a "political tsunami."
Milei scored 30 percent of votes, ahead of the right-wing opposition candidate Patricia Bullrich who scored 28 percent, and the ruling center-left coalition's candidate Economy Minister Sergio Massa, who came third with 27 percent.
The result was seen as a rejection of the traditional political groupings, who have overseen decades of debt defaults, currency crises, and economic decline.
Year-on-year inflation has hit 115 percent, poverty has soared, and the value of the peso has plummeted.
Monday's devaluation saw the peso trading at 365.50 to the dollar, up from 298.50 on Friday.
The devaluation of the so-called official dollar rate is the largest in a single day since December 2015.
The informal market's "blue dollar" -- the most accessible to residents and businesses amid strict currency controls -- was trading at about 680 pesos.
- Tight three-way race -
President Alberto Fernandez is not seeking re-election.
The presidential election is thus shaping up to be a close battle between the top three finisher's in Sunday's primary.
"We have managed to build a competitive alternative that will put an end to the parasitic, thieving, useless political caste," said Milei in his victory speech.
The brash Buenos Aires lawmaker is often compared to former US President Donald Trump and Brazil's ex-leader Jair Bolsonaro.
Sporting disheveled hair and thick sideburns, he believes climate change is a lie and plans to get rid of the central bank, ban abortion and make it easier to buy guns.
Also in the running is former security minister Bullrich, 67, who has called for a harsh audit of the country's plethora of social assistance programs, budget cuts, and the liberalization of currency exchange controls.
Economy minister Massa has battled to reign in inflation, but has managed to make headway in negotiating the terms of the repayment of a $44 billion loan to the International Monetary Fund.
Argentina's Central Bank on Monday also announced a steep increase in its benchmark lending rate -- from 97 percent to 118 percent -- in its third big hike in five months.
The bank said the move would help cushion "exchange rate expectations, and minimize the repercussion on prices."
Dollar bonds and Argentine shares on Wall Street fell around 10 percent.
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