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 surprised the market. A new phase of Argentina’s economic program began — with floating exchange rates operating within divergence bands. Two of the country’s core macroeconomic anchors will shift but continue to provide stability. Starting Monday, the foreign exchange market will again set the pace, determining whether the peso appreciates or depreciates. Argentina returned to a managed float.

Dear ArgenGrowther,

Every week, we present the key data from the past week and delve into various aspects of our beloved Argentina to assess their impact, understand what's happening, and make better decisions. The newsletter is divided into four main sections:

1. Brief Reflection

2. Data

3. Understanding What's Happening in Detail

4. Actionable Items

Brief Reflection

Argentina, Argentina, Argentina! What a time to be alive. One week ago, the landscape was filled with uncertainty, confusion, and instability. The black swan of the global trade war had hit us head-on, shaking the entire board and unsettling the market. But not the government — which, without many public statements, stayed the course of its economic program. And rightly so. It held the ace of spades and the best possible hand, setting the stage for yet another surprise — or perhaps not a surprise anymore — the lifting of the cepo, backed by tremendous financial firepower.

A more flexible exchange rate regime now takes hold, paired with a strong monetary anchor to support the recovery of money demand, drive remonetization, and sustain economic growth. The feeling? Argentina’s economic team operates at an elite level — we’re on everyone’s radar for a reason — and the program design is comprehensive and robust. Nothing has been left to chance. Diverging bands introduce greater volatility, yes, but also much-needed predictability. With the upcoming inflow of dollars, the Central Bank will have ample room to accumulate reserves whenever it sees fit, intervening in the FX market freely and strategically. The return of genuine monetary policy and liquidity management adds substantial firepower to this new phase, showing clear signs that lessons from Argentina’s past have been learned — and internalized.

Anything else? Absolutely: boldness, conviction, and courage to lift the cepo amid a global crisis. This is confidence in action.

Lifting the cepo will simplify life for Argentines and anyone looking to invest in our country. No more twenty different exchange rates — this is a giant leap toward becoming a normal economy.

We all know Argentina moves at a unique speed, and we wouldn’t be surprised if we grow at "Chinese rates," as President Javier Milei put it. The economy is already running at 6%, and now the CPO is gone. What if it accelerates even more? Are we ready for what’s coming?

If the world holds steady and doesn’t explode, could Argentina become a highway for business — a country that shows the world it has the answers for a new path to growth? Are we getting closer? Today, we celebrate the lifting of the embargo with a resounding yes.

Let me take a moment to congratulate the incredible economic team leading the country — they achieved what most thought impossible, but thankfully, not them.

I launched my renewed website! Have you visited it yet?

#data.

Is Argentina's Economic Shift Positive or Negative?

Spoiler alert: PO-SI-TI-VE. Amid chaos and volatility, we end the week with the CPO lifted. The dark years are over, and a major step toward normality begins.

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Dollar and the Strong Peso

Bye-bye, Cepo; you won’t be missed. This week was already destined for the history books due to global events — and now it’s even more memorable as the end of a grim chapter in Argentina’s economic story. The exchange rate gap, the maze of multiple FX rates — all gone. A true turning point.

Where to begin? As soon as the IMF agreement was confirmed, speculation exploded. Everyone watched closely, waiting for the Fund’s disbursement to be approved. Market volatility soared throughout the week. The MEP dollar ended lower, driven by whispers in the market. April futures surged in demand. The conversation was focused on a possible adjustment to the FX framework — but almost no one saw the full lifting of the CPO coming.

And then, the government took the helm again — with strength and clarity. It took charge of expectations, laid its cards on the table, and again took the prize.

The scale of the announcement was surprising. After a month clouded by volatility and uncertainty, it projected solidity and confidence just when they were most needed. A new chapter begins: floating within divergence bands. This is an unprecedented move in Argentina — though not globally. Israel implemented a similar band system decades ago with strong results. If Argentina follows that path, we may finally be onto something real.

So, where will the market go to find the dollar? That’s the million-dollar question, and one only the market itself will answer in the coming days. It’s worth noting that the harvest hasn’t even started yet, and lifting the cepo could be a major catalyst for capital inflows. Logic suggests that, at least in these early days, the FX rate will land somewhere between the official rate and the MEP

Bye Bye Cepo

The FX anchor becomes more flexible, the cepo is lifted, and divergence bands are introduced. Argentina is cinema.

What are we talking about? Let’s start with the easy part — the lifting of the cepo. Exporters, importers, and individuals are now playing on the same field. Gone are the export exchange rate, the import rate, the blend, and all the other variations. Want to operate in the FX market? You go to the market — plain and simple — just like in any reasonably normal country. Are there still limits for individuals? No. So is the cepo 100% gone? Not quite. This is Argentina, and nothing is ever that easy. Dividends remain controlled under BOPREAL, and some company-level restrictions stay in place. But that doesn’t take away from the fact that this is a massive leap toward macroeconomic normalization.

Let’s get into more detail.

To clarify: The 30% tax (percepción) on credit card purchases and tourism-related payments remains, though it may soon be eliminated. With full access to buying dollars in the market and paying cards directly in foreign currency, this surcharge loses all practical relevance.

On dividends and intercompany debt, all restrictions on FX access for dividend payments are lifted for profits reported in financial statements from 2025 onward.

The “dólar blend” is eliminated in foreign trade, along with the 30-day delay for FX access to pay for imports of final goods and services. Import restrictions on capital goods were also loosened.

Additionally, the 90-day cross-restriction was applied to importers accessing the financial FX market before the new regime was temporarily lifted.

The Central Bank will maintain the separation between official and parallel markets for new transactions, and current limits on FX open positions remain unchanged.

Distributing profits to foreign shareholders will be allowed from the 2025 fiscal year, and payment timelines for foreign trade operations will be eased. The nominal anchor is reinforced with a refined monetary policy framework — under which the BCRA will not issue pesos to finance the fiscal deficit or remunerate its financial liabilities.

In the words of the BCRA:

For individuals:

• The cepo is lifted. The USD 200 per month cap to access the official FX market is removed.

• All restrictions tied to COVID-era government support (subsidies, public employment, etc.) are lifted.

• The Communication A 7340 restrictions and the “cross restriction” no longer apply to individuals.

• In coordination with the BCRA, AFIP will eliminate the tax surcharge (percepción) on foreign currency purchases in the official market, which will remain only on tourism and credit card payments.

For new import payments:

• Final goods: Can now be paid in FX upon customs clearance (previously 330-day wait).

• MiPyMEs (small and medium enterprises): pay for goods as soon as they leave the port of origin (1-2 days after customs clearance).

• Services: Can be paid in FX immediately upon service delivery (was 30 days).

• Capital goods: 30% upfront, 50% at port departure, 20% after customs clearance (previously 20% advance for MiPyMEs only).

• Intercompany services: Can be paid 90 days after service delivery (was 180 days).

For businesses:

• On flows:

  • Starting Jan 1, 2025, companies can access the FX market without prior approval or pay compensatory interest on intercompany financial debts

  • Can also pay dividends to non-resident shareholders from profits earned in fiscal years starting in 2025.

• On stocks:

  • For legacy obligations (dividends, intercompany debt, or commercial debts incurred before Dec 12, 2023), the BCRA is designing a new series of bonds: Bonos para la Reconstrucción de una Argentina Libre (BOPREAL). These can be purchased in pesos to settle pre-2025 external liabilities.

Additionally:

These measures, though tied to FX market operations, fall outside the BCRA’s regulations:

• The Export Promotion Program (80/20 or dólar blend) will be repealed. FX inflow timelines for goods/services exports remain unchanged. The simplification of the spot FX market should enhance the development and liquidity of derivatives markets — both for FX and commodities relevant to the broader economy.

• The minimum holding period for negotiable securities (a.k.a. parking rule) for individuals has been eliminated (CNV RG 959/2023).

What Comes Next? Floating Between Bands

The government steps back and gives the market room to operate — but not without drawing the lines. A starting band of 1,000 to 1,400 pesos per dollar is set. Within that range, the market can fluctuate freely. When the price hits either edge, the government intervenes. The real novelty lies in the divergence dynamics: each month, the ceiling rises by 1%, and the floor falls by 1%. The crawl is now two-way. This means that by next month, the band will range between 990 and 1,414 pesos. That’s the field where the game will be played.

The Central Bank put it this way: “The comparative experience of economies that have adopted a banded exchange rate regime has shown that its introduction contributes to the efficiency and credibility of stabilization programs, anchoring expectations and containing volatility. This quality proves especially effective when exchange rate bands are operated by well-capitalized central banks backed by balanced fiscal and predictable monetary policy.” What does this mean? That the anchor may shift, but stability and predictability remain. Especially now, with a recapitalized Central Bank and a stronger fiscal surplus. Even the lower band signals action: don’t sit on your hands, the exchange rate could still appreciate. Uncertainty within a defined framework leads to decision-making.

Here’s an example of how the ceiling works. If the dollar approaches the top of the band, the interest rate in pesos becomes even more appealing. What’s the play? Simple: sell dollars, earn a return in pesos, and repurchase dollars at a better rate next month. If enough people follow that logic, two outcomes emerge: a surge in dollar supply and downward pressure on peso interest rates from rising demand for peso assets. Both effects work to moderate devaluation pressure near the ceiling. If the Central Bank of the Bahamas (BCRA) is in by selling dollars, the incentive to buy at that level disappears, assuming the BCRA has the reserves and credibility to back it up.

And what about the lower end of the band? For the average person, there’s little reason to sell dollars — even if the exchange rate improves slightly next month, current peso yields could allow them to buy more later. The urgency might be higher for companies needing liquidity to pay salaries or operate, especially if they can’t wait to earn interest and suspect a worse rate down the line. Still, when the Central Bank buys dollars at the bottom of the band and issues pesos, it helps remonetize the economy — a key ingredient during growth.

The BCRA laid out its strategy clearly: every time the exchange rate hits the floor (1,000 pesos), it will buy dollars to defend that level, building reserves. The pesos issued will not be sterilized, encouraging organic remonetization as real money demand increases. Suppose the exchange rate hits the ceiling (1,400 pesos). In that case, the BCRA will sell dollars to pull liquidity out of the system and absorb monetary liabilities, quickly neutralizing any excess pesos caused by declining money demand.

Between those limits, the exchange rate will float freely. The central bank may intervene to accumulate reserves or reduce volatility, but such interventions will never be sterilized.

Rebuilding Public Accounts

A downpour of agreements — the necessary funding to lift the embargo was secured, and phase three of the economic program is now underway. What’s coming is a fundamentally new framework. Let’s walk through the main announcements and new measures. We’ll break down the details further in the next sections.

1. Cleaning up the Central Bank’s balance sheet
   a. Agreements with the IMF and other international institutions (World Bank and Inter-American Development Bank)

2. FX anchor flexibilization and lifting of the cepo
   a. Implementation of a banded floating exchange rate regime

3. Strengthening the monetary regime
   a. The BCRA reinforces the nominal anchor by refining the monetary aggregates framework
   . A broad set of tools will now be available for liquidity regulation
   A restrictive bias is introduced at the start of the new regime
   . The cap on the Broad Monetary Base (BMB) as of April 2024 is eliminated

4. An additional fiscal adjustment of 0.3% of GDP for the rest of 2025
   (equivalent to 0.5% of GDP on an annualized basis)

Let’s unpack point one. As we’ve been saying, the Central Bank was functionally bankrupt — with negative net reserves, it was in a coma, and its institutional position was critically weak. Starting next week, not only will it be out of the ICU — it will be strong and healthy enough to play a full game. And more than that, it will have extra energy to spare. With the influx of foreign currency, the government estimates that the new reserve coverage ratio implies a fair exchange rate of around 911 pesos, according to the Ministry of Economy.

Why such a drastic turnaround? Because of the support, the government has managed to secure a mountain of money. USD 23.1 billion in short-term, liquid resources to shift expectations and decisively change the narrative. Add another USD 5 billion from the IMF, a renewed USD 5 billion swap agreement with China, and USD 8 billion in private sector support from the IDB and World Bank. That’s a total of USD 41 billion in firepower.

A true dollar downpour — and a radical rebalancing of Argentina’s macroeconomic playing field.

Central Bank of the Argentine Republic

The most complex transformations are happening here. Just like the FX anchor, the monetary anchor has changed. The principle of zero monetary issuance as a nominal anchor is no longer in place. However, certain fundamentals remain: (a) zero financing of the fiscal deficit by the Central Bank and (b) zero issuance for the remuneration of the BCRA’s interest-bearing liabilities. Phase 3 of the macroeconomic program introduces a conventional monetary regime based on the strict monitoring of the money supply.

We bid farewell to the fixed Broad Monetary Base of ARS 47.7 billion. Now, nominal private M2 takes the lead. From here on out, you’ll be hearing more and more about cash in circulation and non-interest-bearing sight deposits from the private sector. Zero issuance is being replaced by the possibility of printing pesos in exchange for reserve accumulation. The government assumes that FX purchases signal rising money demand, which contributes to the remonetization of the economy. Ultimately, peso issuance or absorption through market operations will allow the BCRA to actively manage monetary aggregates and conduct real monetary policy with greater freedom. And it can operate at any time — not just at the bands. Watch out: the Central Bank may also intervene in the peso bond market.

Straight from the BCRA:
“Objectives of the Central Bank’s Monetary Programming. To implement the new regime, the BCRA will publish its estimated monetary programming based on money demand models, by its legal mandate of price stability (Article 3 of its Charter). These models will allow for quarterly monitoring of monetary aggregates, especially private transactional M2. The initial planning horizon will be the 2025 calendar year, aligned with the timeframe in the IMF agreement.”

This refinement of the monetary framework—using aggregates as the nominal anchor—allows the BCRA to exercise even stricter oversight of the money supply. The level of convergence between actual M2 (the average of the last month in each quarter) and the target M2 will guide whether or not the central bank adjusts liquidity to effectively lead and consolidate the disinflation process.

Monetary and reserve targets are defined in the IMF agreement.
This conventional monetary regime is compatible with the IMF’s quarterly monitoring framework. However, the Fund uses a complementary monetary metric for formal tracking: Net Domestic Assets (NDA).

The agreement contains quarterly performance benchmarks for Net International Reserves (NIR) and NDA, based on projections of the monetary base derived from the BCRA’s models. It’s important to note that the NIR target is a performance criterion, while the NDA path is an indicative target within the agreement.

The BCRA now has many tools to regulate liquidity, all aligned with the FX band framework.

While the exchange rate remains within the bands, the Central Bank can conduct open market operations using its Treasury portfolio or adjust reserve requirement regulations and liquidity ratios. If the exchange rate touches the lower or upper band, the BCRA will intervene directly in the official FX market (MLC). These operations will not be sterilized, resulting in either the expansion or contraction of the monetary base — depending on real money demand. A purchase of dollars at the lower band signals a stronger demand for pesos; a sale at the ceiling signals a weaker demand. In both cases, such operations will not distort the assessment of monetary objectives.

The BCRA adopted a restrictive bias at the start of this new regime to reinforce the nominal anchor. Given external volatility and the inherent uncertainty in transitioning monetary frameworks, the Central Bank has opted for immediate prudence. What does this look like in practice?

• A monetary target more conservative than the baseline scenario. The target for private transactional M2 is set two standard deviations below the base projection from the BCRA’s money demand models (see chart).

  

National Public Sector

The announcement of the agreement with the IMF was an encouraging surprise for those who value fiscal discipline: the primary surplus target will increase from 1.3% to 1.6% of GDP. That means a stronger nominal anchor, more pesos available to respond to potential shocks, greater capacity to meet debt obligations, and a renewed validation of the macroeconomic program.

Once again, the feeling is that the government is firmly on course and won’t veer off course—those who learn to listen can project more clearly and make better decisions.

The Minister of Economy speaks — and delivers. The program’s main anchor remains intact and unmoved.

Economic Activity

Let’s keep it simple today. Lifting the cepo is a highly positive signal for Argentina’s economic activity. The agricultural sector — one of the key engines of the country’s GDP — will recover much of its competitiveness as a promising harvest season begins. Keep an eye on what’s coming.

Inflation

A tough inflation figure, as March always brings strong seasonal pressures. The headline peaked at 3.7%, raising many questions, especially as core inflation accelerated to 3.2%. Still, it’s important to remember that the path to disinflation is not linear. This is a marathon. If monetary aggregates remain under control and the exchange rate anchor holds, we should see a return to monthly rates closer to 2% in the coming months. The lifting of the CPO could create short-term price pressure, and both April and May are likely to come with elevated numbers — unless tax cuts or import-driven price relief provide some cushion.

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Actionables

It is intense, no matter how you look at it. Northern markets experienced volatility reminiscent of crisis scenarios, and local markets rode a historic rollercoaster. To top it off, Argentina ended the week with the game-changing announcement of the cepo being lifted. While the market had already priced in the IMF agreement, it had not anticipated the removal of FX controls. The week closed in the green, and everything points to another positive streak ahead.

The first murmurs of a possible reclassification to emerging market status are already circulating — and we haven’t even kicked things off properly. Without the CPO, the potential for equities has shifted dramatically. A new rally in the Merval could be just around the corner. If global trade tensions ease, the probability increases. If not, we’ll continue to endure the shocks of an unstable world.

As for the peso, there’s less value in talking about what interest rates did — what matters now is what’s coming. We’re about to find out what the Strong Peso rs. Will the currency depreciate this week or not? From now on, the decision belongs to the market — not the government. In this new band regime, fixed interest rates take on a renewed strategic role, while inflation-linked instruments (CER) will be at the forefront of the mind in the coming days as a hedge against potential devaluation. If the peso does depreciate, will there be a pass-through to prices?

Friday’s spike in country risk following the announcement may soon become a historical footnote. We’re likely heading toward significantly lower levels — assuming the market recognizes that the external backing received strengthens the program and substantially reduces the probability of trouble with sovereign debt payments.

In addition, there is support from multilateral institutions, and the overall feeling is that Argentina’s macroeconomic framework is more stable than in decades — if ever. Sovereign bonds may become the stars of the market. Of course, this is still Argentine risk — not for everyone — but if you believe Argentina has turned a page, there’s serious value here.

If you enjoyed this analysis, please share your thoughts, comments, and feedback. Let’s keep the conversation about Argentina’s transformation alive.

Nau Bernués
Founder, ArgenGrowth

PS: Follow me on Twitter and LinkedIn, and let's discuss the Argentine economy's challenges