The Minister of Economy, Luis Caputoadmitted – in a private talk organized by JPMorgan Chase, the largest bank in the United States – the possibility of accelerating the rate of sliding of the official exchange band, which currently moves at 1% per month (downwards at the floor and upwards at the ceiling), moving it to 1.5% per month.
Exchange rate policy is one of the aspects most questioned by local and international economists, by banks and investment funds, as PIMCO crudely did this week, but Caputo pointed out to those attending that meeting – some of whom confidentially revealed the content to Bloomberg Línea – that President Javier Milei “does not intend to let the Argentine currency float, but will keep it within the established ranges.”
The pace of movement of these ranges is what could be considered, said the minister according to the agency’s cable, who noted that Caputo “expects to present the complete plan – which includes a schedule for the accumulation of reserves, the repurchase of debt and a bond for education – within a period of 30 days,” as revealed by one of the attendees at the JPMorgan meeting. Neither the bank nor the Economy responded to queries about the existence and content of the meeting.
The possibility that the government, through the Treasury or the Central Bank, buy dollars within the “divergent” floating band was already contemplated in the agreement that the government signed with the International Monetary Fund (IMF) last April.
But immediately after the agreement Milei and Caputo said that the government would not buy dollars unless the price fell to the floor – initially, 1,000 pesos – of the exchange rate band, something that was never verified and caused the government not to buy dollars at the time of greatest liquidation and supply of dollars from agricultural exports, something that was highly criticized by several analysts, as well as the provocative phrase “buy champion”, which the minister even made in a post on the X network when in July they pointed out that the dollar was very cheap (that is, that the peso was overvalued).
Caputo said in New York, according to the Bloomberg cable, that he expects the peso to continue appreciating as its demand grows through a process of “remonetization” of the economy.
At the meeting, the minister also noted that Argentina plans to buy back global bonds maturing in 2029 and 2030 using a “cheaper” source of financing and that Argentine officials signed a confidentiality agreement with the United States that prevents them from revealing specific details.
Exchange rate policy is – both internally and externally – the most contested aspect of official economic policy. For example, the economist Carlos Melconian He defined it as “upper-class populism,” because it supposedly facilitates the accumulation of savings in dollars of relatively well-off sectors and generates a strong negative balance in the tourism balance, by stimulating Argentineans’ vacations abroad and discouraging the arrival of foreign tourists to Argentina.
This same week, Pramol Dhawanhead of emerging markets portfolio management at Pacific Investment Management Co (Pimco, one of the largest fund managers in the world) urged the government and the Argentine president himself to abandon the exchange band system and let the argentine peso float, according to another cable Bloomberg. It was before the meeting that Milei held with international investors at the Council of the Americas, in New York.
“I strongly advise you to float your currency. I strongly advise you to do it while times are good, if you want to break the cycle of boom and bust,” Dhawan said, according to the agency. “Foreign investors like us will not invest in local assets at these currency levels. Period. Final.”
Pimco’s approach is similar to that of other investors who consider that the peso is overvalued and that the country should completely eliminate trading bands. So far, Milei has shown no signs of being willing to implement this change. Caputo’s, at the private meeting organized by JPMorgan Chase in New York, would be the first conciliatory gesture towards that claim.
