According to a recent Reuters poll of strategists, Argentina’s peso currency is facing the risk of another devaluation following the presidential election in October or a possible second round in November. Last month, as part of an agreement with the International Monetary Fund (IMF), the government depreciated the official exchange rate by nearly 18% and fixed it at 350 pesos per dollar after a primary vote. However, economists now predict that in three months, the peso will trade at 419.8 pesos per dollar, indicating a 16.6% devaluation after the upcoming elections. Only one respondent expected the peso to remain unchanged at 355 pesos per dollar during this period, while the rest believed that the peg would be broken, with estimates ranging from 383.8 to Goldman Sachs’ forecast of 700 pesos per dollar. Economists argue that inflation will erode any competitiveness gains achieved through the devaluation after the primaries, leading to a significant adjustment in the official exchange rate towards the end of the year. The IMF is expected to demand further corrections before releasing additional disbursements. The peso is forecast to weaken by 65% in 12 months, reaching 1,004 pesos per dollar. Currently, in parallel markets, the peso is already quoted at around 720 pesos per dollar, almost 100% higher than the official rate. President Alberto Fernandez and Economy Minister Sergio Massa attribute Argentina’s economic difficulties to factors such as this year’s drought, opposition tactics, and corporate greed. On the other hand, political contenders Javier Milei and Patricia Bullrich, whose parties outperformed the Peronists in the primary, blame excessive spending and money printing for the country’s financial troubles. Economists suggest that the government will have to devalue the peso again due to running out of resources, and the timing will depend on the election results. So far this year, the peso has depreciated by 50%. In contrast, the Brazilian real and the Mexican peso, Latin America’s top currencies, have gained 6.4% and nearly 12%, respectively. In one year, the real is expected to trade at 5.03 reais per dollar, just 1.2% weaker than its current value, while the Mexican peso is projected to have a relatively modest decline of 2.3%, trading at 17.84 pesos per dollar.
Argentina peso at risk of another devaluation after election, Reuters poll shows
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