Argentina’s official U.S. dollar exchange rate rose by 3.5% this week, in the wake of Economy Minister Luis Caputo’s ironic instigation to buy dollars during a speech on Tuesday. The dollar reached AR$1,260 per unit — the highest value since the government lifted the foreign currency restrictions on April 14.

On stage at the Summit IAE Business School in Buenos Aires, Caputo spoke to an audience of 700 business executives and took a jab at analysts who claim the government has artificially propped up the peso in a bid to contain inflation. According to several reports from economists and think tanks, the strategy resulted in a relative undervaluation of the U.S. dollar in the country, as well as the highest prices in Latin America.

“To anyone who thinks it’s that cheap, grab the pesos and buy [U.S. dollars],” Caputo said ironically. “Don’t miss out on it, champ. If you have pesos, the exchange rate is floating, and you know for a fact it is very cheap, go ahead and buy,” he added.

In the following days, the official exchange rate jumped from AR$1,218 on Monday to AR$1,260 on Friday.

Exchange rate on the rise

This week, a ruling in New York against Argentina in the YPF case, a less-than-enthusiastic evaluation by JP Morgan financial firm, and political turbulence from the upcoming mid-term elections sparked some noise in the country’s markets, causing the peso to weaken.

Additional questions about the sustainability of Caputo’s economic plan arose over the US$5.2 billion foreign exchange deficit in the first quarter of 2025, which was revealed in an official report last week. In tourism alone, the country’s coffers are in a US$3.47 billion deficit in the first quarter of the year.

A report by EPyCA consultancy said that the government “has chosen to compensate for the external imbalance with a growing debt.” 

“Argentine history has shown on numerous occasions that the financing of the current account through the capital account is unsustainable and, if sustained and/or deepened, ends up leading to a devaluation,” the report added.

However, a document published this week by 1816, another consulting firm, claimed that a foreign currency “windfall” from the agricultural export sector is expected in the next three weeks.

In just three days, exporters reported sales abroad for US$2.7 billion, and for US$6.5 billion in just 12 working days. “This is an unprecedented amount for a similar period, except for what happened in September 2022,” wrote 1816 analysts. The exception refers to the preferential exchange rate for exporters created by former Economy Minister Sergio Massa.

According to the report, in the next three weeks, the government will have to choose “between taking advantage of the extraordinary supply of foreign currency and accumulating reserves through Treasury purchases” or “trying to make the exchange rate appreciate” in order to consolidate disinflation.

However, their assessment also added that the August-October quarter is usually challenging for the balance of payments due to the typical seasonality of agricultural exports, people paying for their vacations abroad, and U.S. dollar demand for pre-election coverage.

“In the meantime, [Monday’s] extraordinary supply from the agricultural sector [in the foreign exchange market] did not prevent the exchange rate from closing above AR$1,200,” the report said.