Argentina to adjust peso band ceiling monthly in line with inflation from January 2026

The announcement had an immediate impact on local markets: the dollar's exchange rate rose, bonds gained in international markets and country risk fell, which Fundssociety described as a signal of approval from foreign investors.

Adcap Grupo Financiero said the only missing piece in the new plan is elimination of the capital controls that still remain.

Analyst conditions

Local economists project inflation of 20% to 25% in 2026. Control of the fiscal deficit and export income should increase dollar inflows and help raise central bank reserves, giving the government more room to support the peso.

Banco Mariva said it is optimistic the plan will not push inflation higher, but it set two conditions: the budget surplus holds and monetary policy stays restrictive. The bank said a budget surplus, with deficit monetization eliminated and public debt stabilized, would allow demand for monetary liabilities to be met through the sale of private sector assets to the central bank, helping reserves accumulate without inflationary pressure. A restrictive monetary policy would avoid having to sterilize increases in the monetary base if money demand grows more slowly than the central bank projects.

Inflation and reserves

Traders Union reported that inflation fell from 211% when Milei took office in 2023 to 33.5%. Exports rose 21% in the January to August period from a year earlier, and the trade surplus reached $18 billion, more than triple the earlier level, helped by mining investment and oil and gas output from Vaca Muerta. The same report said China renewed a $19 billion bilateral currency swap in August for another five years.

In July, IMF managing director Kristalina Georgieva said Argentina is in a much stronger position and expressed confidence that the country would meet its debt obligations. The IMF estimates the peso is 9% to 20% overvalued, depending on the methodology.

The central bank projects the monetary base rising from 4.2% to 4.8% of GDP by December 2026, with reserve purchases of up to $10 billion. Daily execution would be aligned with up to 5% of traded volume, which currently stands at around $400 million per day.

Capital controls and the January payment

Capital controls remain. Milei made deep cuts in government spending a precondition for lifting them. Freeing the currency before fixing the deficit could trigger high inflation and weaken the peso, he argued. The Daily Economy reported that Mauricio Macri's 2015-2019 government let money move more freely but was slow to cut deficit spending, borrowed heavily and hit a debt crisis when global investors pulled back in 2018.

On 9 January 2026, the Treasury must pay principal and interest on Bonares and Globales of about $4.2 billion. Fundssociety estimated government reserves at about $1.5 billion. To meet the payment, the government could resort to a bond-backed loan, or REPO, with international banks. It also has in place the currency swap agreement signed with the U.S. Treasury. Finance Minister Luis Caputo says the government can meet repayments without returning to international capital markets.