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Remonetization, Cash Cushions & Export Taxes
A short week to take the edge off the adrenaline of living in Argentina. The dollar barely fed those rooting for it to go up or down. The market has already forgotten the removal of FX controls and has gone back into a cepo-induced lethargy. With the “Anker point” trending, money demand steps onto the field and is getting ready to be the star.
The Country Grows, Inflation Hides, and We Keep an Eye... on the Dollar
The country is experiencing strong growth, and the dollar is stabilizing. Inflation seems to have lost its way, and the new rules of the game demand adaptation. Prices are no longer fully passed on, and the Argentine cost is now more than ever in the eye of the storm. Economic growth is the mother of all answers.
Let’s Float, My Love, Let’s Float, My Love
The U.S. dollar is groggy, stumbling through Argentina’s new monetary regime. Currency exchange rate bands are now in place, and the Peso Fuerte—stronger than ever—asserted its presence, dominated the narrative, and demonstrated that the removal of currency controls (cepo) has, so far, been a resounding success. The Argentine government continues to overcome major challenges, yet inflation remains a persistent threat. Will we ever reach a day when inflation vanishes and the dollar becomes irrelevant in everyday conversation?
Bye Bye Currency Controls
What a divine pendulum Argentina is. How could anyone be bored? Just a week ago, everything was uncertainty and resignation in the face of an increasingly complex global landscape. Today, it's all joy and hope: the cepo is gone. The financial support secured exceeded expectations, and the government's announcements took the market by surprise. A new phase of Argentina’s economic program begins — with floating exchange rates operating within divergence bands. Two of the country’s core macroeconomic anchors will shift, but they will continue to provide stability. Starting Monday, the foreign exchange market will once again set the pace, determining whether the peso appreciates or depreciates. Argentina returns to a managed float.
Just When We Thought It Couldn’t Get Worse: A Divine Black Swan
Headwinds turned into a storm, and Argentina's market got smashed. A Friday of fiery red wiped out everything—Argentine stocks, sovereign bonds, the dollar, Brazil, China. The global trade reshuffling brings economic pain and, for now, few benefits. Still no updates from the IMF, and investors are looking at Argentina with growing skepticism. The government continues with its economic program—will this newly born black swan be the force to change it?
Much Ado About Nothing in Argentina’s Economy
The agreement with the fund is, but it isn't. In Argentina, nothing is easy, and closing the deal with the International Monetary Fund (IMF) was not going to be the exception. Yes, we can say that the USD 20 billion number being talked about is excellent, and the country needs it to come out of its economic coma. Debt payments are being pushed forward, giving the government’s finances some breathing room. The still-skeptical financial market is waiting to pay heavily.
The Clouds on the Horizon Appear, but the Government Remains Steadfast, Soaking Up the Sun
We weren’t bored, were we? No matter when you read this, Argentina always has something to offer. Politics doesn’t let up and will remain at the center of the stage until the elections. Meanwhile, the economic landscape continues to show its contrasts. On one hand, the government remains unfazed by the opposition's attacks and doesn’t alter its financial strategy. However, despite increasingly solid public accounts, the market demands increasingly higher rates to renew pesos and still refuses to buy bonds. In this context, what are the keys to what’s coming?
Debt Moves to Move Forward?
The agreement with the International Monetary Fund (IMF) is at the center of the stage, and its fate is critical. With a bankrupt central bank, rebuilding its equity is essential for an orderly exit from exchange controls. The real economy also needs this, though not immediately, as weekly data continue to show a country in full growth.
Did the Ace Up the Sleeve Show Itself?
Will the President’s economic strategy shift Argentina’s market sentiment after weeks of uncertainty? Investors, economists, and analysts will closely follow the IMF agreement negotiations and the congressional debate. Get ready—Argentina’s financial and political landscape will become even more dynamic. Meanwhile, the real economy continues to show resilience and growth.
Hop on and hold on
I don’t want to repeat myself, but it isn’t easy. Will you allow me to say again that the Argentine economy is like this: erratic, dichotomous, polarized, a little schizophrenic, unpredictable, a bit capricious, and, perhaps because of that, we like it so much? On Monday, we had a finished government, and by Saturday, we had the Executive riding the wave's crest. Not even the best screenwriters could come up with this—cinema at its finest.
Unforced Error to Avoid Boredom
But it wasn't boring. Well, Argentina doesn't care about that. Last week we mentioned that the country is like this: uneven, dichotomous, polarized, somewhat schizophrenic, unpredictable, a bit capricious, and perhaps that's why we like it so much. Today we repeat it, but for a different reason. When the spotlight was on Congress, the real economy, and the agreement with the IMF, the President communicated via Twitter, and the bomb went off. Movie-like.