Commencing this Friday, January 2, the newly established inflation-adjusted band scheme will be implemented. Through its implementation, the economic team led by Minister Luis Caputo aims to expand the upper limit of the exchange rate scheme to ensure that the accumulation of foreign currency, a demand long postponed by the government, does not exert upward pressure on the exchange rate against the ceiling of the band, compelling the authorities to relinquish those same dollars. Economist Francisco Ritorto states that the new scheme set to launch in 2026 “aims more at lowering the probability of tensions than at generating a sudden movement of the dollar.” In an interview he remarked that “the idea is to give a little more predictability to the exchange rate regime, with a better calibrated band and currency purchases that are aligned with the demand for pesos, to avoid defensive reactions to any noise.”
Economist Christian Buteler characterized the new band scheme as “better than the previous one” since “it takes into account what happens with the rest of the prices in the economy” and is not “an arbitrary number like 1% monthly, which caused the band ceiling to drop every month in real terms because inflation was above that amount.” However, Buteler expressed skepticism regarding the notion that the dollar “will fall nominally,” a condition he considered essential for the Central Bank to engage in dollar purchases. “With an exchange rate at 5% of the ceiling of the band, any extra demand placed on it causes it to immediately reach the ceiling and the Central Bank ends up selling, contrary to what it needs to do,” he explained. “This new scheme enables them to keep pace and uphold that ceiling in line with the rate of inflation. The decline in the band’s ceiling that transpired over the year remains unaddressed. At that juncture, it appears that we persist with that inconvenience. It is neither experiencing a further decline nor is it poised for recovery,” he added.
In a complementary perspective, Matías Rajnerman stated that “the net demand for dollars has accelerated in recent days,” indicating robust interventions by the Treasury. On the previous Monday, gross reserves experienced a decline of US$1,718 million, with US$1,345.5 million lacking an official explanation, as reported. “If a change is coming in the seasonal demand for money that may explain this dynamic, we will have to see if the Central Bank in January begins to buy dollars as it stated on December 15 or maintains this sales posture. “Depending on one scenario or another, the exchange rate would tend to accelerate,” argued the Bapro executive. He stated, “With that resolved, obviously whatever happens to the dollar rate will have an impact on inflation.”
Ritorto affirmed that the government’s focus “continues to be on sustaining disinflation.” Consequently, “the signal is that monetary expansion will be limited and consistent with what the economy demands, which helps maintain the nominal anchor, as long as the scheme is sustained over time.” Buteler noted that “inflation is around 2% and with all the increases that will follow, such as rate updates and others, it is a difficult point to break.” He remarked, “Within that range, lowering it down to the levels the government wants seems difficult.” In a similar vein, Rajnerman posited that “inflation continued to rise in December,” with an increase “that could even be above 2.5%.” He clarified that “although December is usually a seasonally busier month than January in terms of prices, a priori there are no great reasons for inflation to drop.” As noted, “the challenge of 2026 will be to manage a fine balance between fiscal consolidation, disinflation and exchange rate stability.” In this context, they contended that the government revealed a set of measures for 2026 that “imply a permanent reduction of resources of close to 0.7 points of gross domestic product,” and that to mitigate this decline in resources, the government has two primary alternatives: subsidies and taxes on fuel. “The increases in fuels and tariffs exert pressure on the consumer price index in the short term (if all the increases in gasoline and tariffs were implemented, the impact would have been 1.2 points on the CPI in January) and, in an exchange scheme that adjusts for past inflation, this can heighten devaluation expectations and challenge the consistency of the nominal anchor,” they stated.