Buenos Aires Herald 
From today, Argentina’s structure of rigid currency controls known collectively as the cepo (clamp) are becoming more flexible. The dollar started to trade under a banded exchange rate scheme that will allow it to float between AR$1,000 and AR$1,400. Analysts and market participants say the city is expecting a devaluation of at least 15%.
At 10 a.m., the official dollar was trading at AR$1,250 on Banco Nación, the first official figure under the new scheme. This is the government’s first point of reference for the exchange rate.
On the main exchanges, the rate is between AR$1,270 and AR$1,350:
- Binance USDT: 1,270
- Fiwind: 1,295
- Buenbit: 1,301.25
- Rippio: 1,306.09
- Lemon: 1,312.82
- MEP Balanz: 1,340.60
- Belo: 1,350
Banco Macro said its systems were ready to operate under the new regulations from Monday at 10 a.m. Banco Galicia likewise announced that it would enable the purchase and sale of dollars at that time. ICBC also said it had adapted all channels and branches to the new regulations.
- Galicia+ is operating at AR$1,200
- Banco Ciudad: AR$1,269
- Santander: 1,210
- BBVA: 1,250
On Friday evening, Economy Minister Luis Caputo announced that Argentina had reached a US$20 billion deal with the International Monetary Fund would drop currency controls from this Monday.
The general population can now buy dollars without restrictions. Companies can transfer dividends on profits earned from 2025 on. However, some restrictions remain: among others, companies cannot transfer dividends on profits from previous years, and companies that have operated in the financial dollar (CCL and MEP) markets are restricted from accessing the official dollar.
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All eyes were on how the dollar rate would move when markets opened today.
Over the weekend, banks raced against time to update their systems and norms to accommodate the changes.
‘Flotation, not devaluation’
Operators in the city expect the peso to devalue by at least 15% from Monday, and for the wholesale dollar to jump to AR$1,300-1,340, close to the financial exchange rates at close of trade on Friday.
The adjustment would mean a 20-25% rise. The Central Bank said it would “promote the free float of the exchange rate between the limits established for the regime,” but that it “may consider purchasing dollars depending on its macroeconomic and international reserve accumulation goals, as well as the sale of dollars to mitigate unusual volatility.”
In other words, the Central Bank will not limit its intervention to when the rate approaches the band’s edges.
When it purchases currency, there will be no peso sterilization, since it is assumed that the counterpart of such interventions is increased monetary demand.
The government attempted to bring calm through its announcement. Caputo stated that “it is not a devaluation” but a “flotation.”
“A devaluation is when you guarantee a minimum exchange rate. We’re not doing that. The dollar could be worth AR$970 in a year,” he said.
What analysts expect
The Herald’s sister title Ámbito asked operators and analysts in the city what they expected for market opening.
Economist Martín Kalos said it would rise to around AR$1,400. “I understand the government intends that, as dollars enter reserves, it will calm down, it could fall, and could actually remain between bands,” he said.
It will also depend on events on the world stage, he added. “It depends a lot on how the trade war between China and the United States is going, because that volatility goes to the price of the dollar here in Argentina.” It will also be influenced by local variables such as inflation, which sped up in March, he said.
Kalos expects the official dollar rate to jump from the Friday wholesale closing price of AR$1,078 to AR$1,300, which would also imply rising inflation in April.
Economist Federico Glustein agreed that the dollar would go to between AR$1,250 and AR$1,300. He expected “strong initial demand” of around US$1.5 billion-2 billion in operations. “Above all because the first disbursement covers a part, but then it stabilizes,” he said.
“Although, in the current context, that might not be enough, especially after the elimination of the blend dollar and with less chance to go through parallel [rates] that are probably slightly above the official, but by less than 5%,” he said.
Export dynamics
In that case, he said, April inflation could be above 5%, although it would depend on the value at which the official dollar stabilizes and how that affects categories such as food. This is likely to push more Argentines into poverty, with a new peso devaluation and price rises speeding up. These effects are not expected to be as accentuated as in December 2023, but they do threaten workers’ pockets.
Economist Gustavo Ber categorized the announcements as “positive” and hoped it would be reflected in the market reaction throughout Monday. It had already been reflected in after-market trading of ADRs (Argentine companies on Wall Street trade through American Depositary Receipts, or ADRs).
He expected the dollar to open between AR$1,250 and AR$1,300, but said that it “could deflate in hand with an accelerated liquidation of exports.” Given low international prices, however, exporters may keep liquidations to a minimum.
“Depending on the exchange rate dynamics, it mean an adjustment of short-term prices, and I don’t see any risk that the currency band would be insufficient in the current economic and financial context,” Ber said.