Argentina will have a floating exchange rate “pretty soon” as its current trading band widens, according to President Javier Milei’s deregulation czar.
“The bands are opening up as we move along, actually pretty quickly. So Argentina is doing a transition to a floating exchange rate,” Federico Sturzenegger told the Bloomberg Global Regulatory Forum on Tuesday. “We’re going to have a floating exchange rate pretty soon.”
Since April, Argentina has let the peso float within a range as part of its agreement with the International Monetary Fund. However, authorities have intervened multiple times within the range, which expands in either direction each day.
Investors argue Argentina will eventually have to ditch the FX bands that have held the peso at artificially high levels. They’re looking for a change in foreign-exchange policy after a midterm vote on October 26, in which half of the seats in Congress are up for grabs. Milei needs to gain broader legislative support in order to push ahead with his most controversial reforms.
Economy Minister Luis Caputo, however, told a local TV channel Sunday that the nation would maintain its current band system, with the US government willing to keep buying pesos to support it.
On Tuesday, an aide to Caputo swiftly shot back at Sturzenegger, who headed Argentina’s Central Bank under former President Mauricio Macri. The bands “are not going to be modified, neither before or after the election,” Felipe Núñez said Tuesday in a post on X shortly after Sturzenegger spoke.
Milei is scheduled to visit US President Donald Trump on Tuesday at the White House, a meeting that’s expected to provide more details on a US plan to backstop Argentina’s finances. The country’s dollar bonds were up across the curve, with notes maturing in 2035 gaining almost a cent, according to indicative pricing data compiled by Bloomberg.
“It’s puzzling to see the minister of deregulation speaking on FX and trade, given that the economy ministry has recently taken the opposite stance,” said Joaquín Bagues, managing director at local broker Grit Capital Group. “Sturzenegger’s remarks reinforce market expectations that Argentina is transitioning toward a more flexible FX regime.”
by Nicolle Yapur & Jorgelina do Rosario, Bloomberg
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