According to a report by the consulting firm Econviews, the real challenge for Argentina is to convince the world that it does not need a higher exchange rate and, therefore, there will be no devaluation. The government defends the strength of the peso by arguing that the economy has become more productive due to deregulation and economic openness, and also highlights the export potential in sectors such as oil, gas, mining, and agriculture.
On the other hand, it is pointed out that there are challenges in the short term, as Argentina finds itself without international reserves and with high country risk. It is essential that the economic program continues its successful course and that the export potential is utilized to achieve stabilization with a strong currency in the medium term. Consultant Javier Milei has defended the current exchange rate scheme and has criticized economists who advocate for devaluation.
The consulting firm highlights the country's dependence on external financing to cover a growing deficit in the current account and suggests that if the dollar remains stable around $1,200 for several months, the discussion about a possible exchange rate lag and the need for devaluation could be reignited. It is also mentioned that it is too early to assess the success of the economic program and that credibility will be crucial in the government's plans.
It is expected that the elections and uncertainty about the exchange rate following the end of the currency controls will have repercussions in the market. The analysis highlights that there are no shortcuts, and credibility will play a central role in economic decisions. Ultimately, the viability of maintaining a "cheap dollar" in the future is questioned.
