November 14, 2025 – Investors are pressing Argentina’s government to introduce greater flexibility in its foreign exchange regime, saying a more dynamic peso could help rebuild reserves and attract foreign direct investment (FDI), even as President Javier Milei and Economy Minister Luis Caputo insist the current band system will remain through 2027.

Peso Pressure and FX Band

The peso continues to trade closer to the weak end of its official band after months of strong dollar demand. Futures markets suggest the currency could breach the band within 12 months, signaling market expectations for an adjustment.

Analysts recommend a gradual widening of the official crawling band, which currently expands 1% per month, paired with a formal reserve-accumulation program to boost market confidence.

U.S. Support and International Borrowing

Short-term confidence in the peso has been supported by:

• A $20 billion U.S. Treasury swap line, allowing the central bank to sell dollars ahead of elections.
• Recent corporate bond issuance abroad, raising over $1.7 billion, providing local dollar liquidity for operations.
• Pledges of multi-bank loans and sectoral investments as implicit backstops.

While these measures stabilize the peso in the near term, investors see structural FX reform as essential for long-term reserve accumulation and sustainable market access.

Implications for Foreign Investment

Maintaining a rigid FX regime could deter broader FDI outside commodities, analysts warn. Political continuity into the 2026 presidential election could influence the government’s willingness to adjust the crawling band or allow a slightly faster peso depreciation to support reserves.

Outlook

Most economists expect the government to hold the current FX framework through year-end, with potential adjustments in 2026 based on reserve targets. With inflation at 31% year-on-year and ongoing peso pressure, analysts say timely action will be crucial to restore confidence and attract foreign capital.