Outside of the countries that have the dollar as their official currency, Argentina and Russia are the two systems in which their citizens hold American bills. According to INDEC estimates, at the end of the second quarter of 2025 there were US$269,375 million in accounts abroad or in safe deposit boxes and cash outside the local financial system, what is popularly known as dollars under the mattress. If there are dollars, the great paradox is that it seems that they will never be enough, in the face of an inexhaustible demand. Of course, who has them is not who needs them…
Imported currency. Unlike other countries, Argentina went through a decades-long process of erosion in the credibility of its own monetary sign. This mechanism, which economists like Ricardo Arriazu They emphasize its essential importance to explain the behavior of the exchange market in Argentina, distorting the traditional equilibrium point of any market. The greater the instability, the demand for dollars grows and with it its price. The supply (basically made up of exports of goods and services) takes time to grow even though there are optimistic forecasts regarding the evolution of the exportable balance of the mining and energy sectors, which are already a reality, reversing the trade deficit that existed until last year.
The great fear since relative prices rearranged themselves during the first quarter of last year (and once again “thanks” to an inflationary jump) was that price stability could persist even with an unstable exchange rate.. For this reason, the “official dollar” was the target chosen as the anchor of the economic program in force until March of this year, when the noises of exchange delay and expectations of a necessary correction once again pushed the demand for dollars until leading to the agreement with the IMF in April that made the stocks more flexible (for individuals) and freed the Treasury from urgent debt service payments thanks to the contribution of “fresh” funds. There, the “mobile bands” system was also born, which, with promises to sell at the ceiling and buy at the floor, was later unfulfilled. The reason is not original: the Treasury was never able to generate the necessary surplus to maintain the “primary” result and supply dollars to pay maturities. The political siege of the opposition, crystallized in the reversal of presidential vetoes in a Congress in a clear minority, resulted in doubts about the sustainability of a program that should require a continuous flow of fiscal surpluses or the ability to renew at reasonable rates the maturities that are falling. And as the chief economist of the consulting firm Invecq maintains, Matías Surtthe market always anticipates. That is the reason why doubts have appeared since July and in Argentina the doubts pave the way for the demand for dollars. For example, the emergency measure of temporarily lowering withholdings to 0% for grains left “a little taste,” according to the Invecq report, since “the Treasury not only bought less foreign currency than expected, but has already started selling again,” adding that producers showed discomfort at not being fully benefited by the measure. “Consequently, the question reappears about how the remaining weeks until the elections will be spent, with a growing exchange rate fragility,” he adds.
Transfer at prices. The biggest question since the turbulence on the exchange front began was how and, above all, how long it would take for the price indices to change.
Controlling inflation, bringing it down and trying to make it converge with the devaluation rate and the interest rate was the driving force of the economic program for more than a year.. When these communicating vessels became clogged with the use of the interest rate as a regulator of the shortage of dollars to prevent the surplus of pesos (enhanced by the “disarmament” of short-term bills), the last frontier to calm the crisis was to prevent the jumps in the price of the dollar from being transferred to the shelves.
The August CPI had marked a decrease (1.9%) that made the new inflation floor fluctuate at 2% monthly. The survey of retail prices by the consulting firm C&T for Greater Buenos Aires had a monthly increase of 2% in September. Thus, the twelve-month variation was reduced from 32.5% in August to 30.4% in September, the lowest since June 2018. “Seasonal components played a key role: clothing was the item with the greatest increase, 4.7% monthly, a common behavior in September due to the change of season,” explains its owner, Camilo Tiscornia.
For its part, Alfredo Romano It is based on the measurement of the City of Buenos Aires to indicate a possible break in the downward trend of inflation. ANDThe CABA CPI showed an increase of 2.2% for September, but looking at its breakdowns, it is the first time since January 2024 that goods have increased above services. Although the differences are still minor, to the extent that the exchange rate stops being an anchor for prices and becomes a candle, this trend could be altered and prices could return to an upward path. For Eco Go’s retail price survey (RPM), for example, in the first week of October it showed a 0.9% increase in food and they project a 2.6% for October. “Twenty days before the elections, the month is shaping up to be complex, raising our projections upwards,” underlines.
The lifeguard. While this match is basically being played against time, market decision-makers are trying to unravel the fine print of the agreement with the States
According to estimates of Invecq on CIARA-CEC data, Throughout 2024, agriculture settled US$28,233 million, above the average of the previous two decades but almost identical to what was accumulated in the first 9 months of this year (US$28,445 million).. The rebound in September has an explanation: the advance of settlements for the rest of the campaign and conclusive proof that the elasticity with respect to price in the sector is still high. Argentina continues to be almost the only country that fiscally punishes exports in the sector, which poses a double challenge: how to boost sales without definancing the Treasury, so as not to alter the necessary balance but also to not continue losing ground to our neighboring competitors.
This raises the urgency for the post-electoral scenario, taking the October 26 elections as a milestone, not only because it will shape the formation of the future Congress (vital to understand how much support the Government will be able to have for something as basic as having a budget, with what it brings predictability). “Within 14 business days of knowing the composition of the legislative chambers for the next two years, the Treasury burned almost all the dollars it obtained since purchases began via ‘block trade’.‘and of the US$15,000 million that agriculture has liquidated since then (including the US$6,103 million due to the temporary reduction in withholdings) the Treasury was able to retain only US$1,200 million,” he explains. Marina Dal Poggettodirector of Eco Go. To complete the picture, having responded to the flood of demand for dollars to not validate higher prices, was the sale of futures and the offer of “dollar linked” bonds (adjustable by the exchange rate) that are close to US$15,000 million, compared to the almost US$18,000 million that Massa had sold and the US$21,000 million of Cristina Kirchner in 2015. In essence, as the economist IDESA Jorge Colinathe persistence of a country risk above the 1,000 points having been rescued by the IMF in April and the announcements of the North American Treasury recently could not lower itthere remains a problem of credibility in the sustainability of the fiscal balances achieved. “By leveling income with expenses, we stopped putting pressure on monetary issuance and/or accumulating public debt; however, even though the tap on the fiscal deficit is turned off, there is still the challenge of managing the inherited debt” concludes. Citing the example of Uruguay, with a debt of 68% of GDP it has a country risk of 70, fifteen times less than Argentina with a similar debt/GDP (66%). In his opinion, although the agreement with the United States and the result of the elections are key issues, what is decisive to regain credibility is to give strong signals that the fiscal balance will be maintained. And the only way to achieve this is to reach an agreement so that the health of public accounts is preserved in a sustainable manner. What they demand today even loudly, from the Secretary of the Treasury to the director of the IMF.
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