The United States government surprised a few weeks ago by stating that it was “ready to do whatever is necessary to support Argentina.” The forcefulness of the announcement was not enough to reassure the markets. This motivated an emergency trip by the economic team to begin implementing support. The first action was the intervention of the US Treasury by purchasing pesos in the local market in exchange for dollars. Added to this is the confirmation of a swap – currency exchange – for US$20 billion for Argentina and other actions in the same direction are not ruled out.
Within the turbulence generated by the pre-electoral stage, the desired objective would be fulfilled. The first reactions were the drop in the country risk and the rise in the shares of Argentine companies listed in New York. The most important thing is that the price of the dollar in the local market remains within the exchange rate band. The question that remains is how lasting these trends can be. Put another way, Whether the firm support of the United States government justifies the euphoria or has to be taken as an opportunity that, to take advantage of, requires complementary actions.
To explore this issue, it is pertinent to identify the main sources of pressure on the dollar. According to the exchange balance of the Central Bank for January – August 2025 It is observed that:
-The demand for savings was US$17 billion where everything occurred since April 2025, when the stocks for human beings were put to an end.
-The external debt services (principal plus interest) consumed US$12 billion.
-Spending on tourism abroad was US$8 billion.
These data show that these three sources of dollar demand (savings, debt services and tourism) consumed US$37 billion in the first eight months of the year. For reference, the difference between exports and imports of goods generated US$12 billion. Under these conditions, the pressure on the exchange market is intense.
Several factors drive the pressures, but a decisive one is mistrust. There is no doubt about the government’s will to comply with debt payments and maintain fiscal balance. But there are doubts about his ability to achieve it. There are more doubts about the possibility of advancing structural reforms. This is the main reason why the country risk does not decrease and, therefore, debt maturities cannot be refinanced by voluntary means. In the same sense, distrust leads to the massive purchase of dollars for savings.
In the short term, the combination of fiscal balance and support from the United States treasury works in favor of calming the financial market. In the medium term, the alternative appears that with the RIGI dollars enter through foreign direct investment and exports in sectors such as mining, energy and the knowledge industry. If, in addition, rapid progress is made towards a better organization of the exchange and monetary market, eliminating controls and regulations, it is feasible to consolidate stability.
To take advantage of the opportunity, the government has to substantially improve its political and technical management capacity.. On the one hand, doubts must be cleared up about the sustainability of the fiscal balance. On the other hand, a more favorable environment for production must be created. It should be noted that exchange stability does not guarantee the creation of jobs that will lead to restoring the degraded social situation. For this reason, the modernization of labor institutions is very important. Within it, it is key to give priority to company agreements over collective agreements of sector, branch or occupation.
The aid from the United States government is good news that gives hope, but it does not give rise to euphoria. It is the opportunity to calm the markets, improve the exchange and monetary regime and, most challenging, improve technical and political management. This depends less on the outcome of the elections and the United States than on a change in strategy by the government in favor of technical professionalism and constructive dialogue.
by Jorge Colina
