The gap between Argentina’s official exchange rate and popular parallel rates — which was nearly 200% last year amid falling confidence in the currency — has narrowed to single digits under the government of libertarian President Javier Milei.
The strengthening of the currency in the unofficial markets that Argentines use to circumvent strict capital controls, in place since 2019, is being driven by Milei’s focus on a “zero deficit”, which has helped bolster confidence in local assets.
The peso appreciated around 1% in the parallel market this Tuesday (3), to 1,090 per dollar, less than 8% difference from the official rate of close to 1,013 pesos. This difference was 60% in July and around 170% when Milei took office in December 2023.
“The difference between (parallel) financial dollars and the official dollar is already comfortably in single digits,” said economist Roberto Geretto, from Buenos Aires-based consultancy Adcap.
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“The financial dollar is at its lowest level since May 2018, when there were no currency restrictions.”
Milei devalued the peso by more than 50% shortly after taking office, which increased inflation. However, strict spending cuts, reversal of a deep fiscal deficit and measures to increase reserves and dollar deposits have strengthened Argentina’s currency since then.
Companies and investors are closely watching the currency, with the lifting of capital controls one of the main demands of many agents. They say the restrictions remain a major obstacle to doing business in the grain- and gas-rich country.
