Wall Street Banks See Opportunity for Argentina to Float Peso
According to Wall Street banks, the victory of La Libertad Avanza in the midterm elections has opened a window of opportunity for President Javier Milei's government to speed up economic normalization.
Financial giants see a favorable scenario for Argentina to move towards a floating exchange rate for the peso and rebuild reserves. This could lead to a plan to modify the exchange rate regime or even liberalize it.
Citibank predicted some relief in local markets, "particularly focused on the foreign exchange (FX) sphere" and noted that "a definitive decision on the long-term exchange rate regime is still awaited."
However, decisions concerning the peso are unlikely to come in the first few days post-election. The government is expected to prioritize the purchase of international reserves and make changes to the exchange rate regime.
Author's summary: Milei's government may float the peso.
- Citibank intervened in the Argentine market last week by purchasing pesos through the US Treasury.
- The long-term exchange rate regime is still uncertain.
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