Uncertain trajectory: The Argentine currency approaches 1,000 pesos to the dollar

The Argentine currency approached the symbolic threshold of 1,000 pesos to the dollar on Thursday, continuing its slow depreciation against a backdrop of still high inflation and budgetary austerity. At around 6:40 p.m. GMT, the greenback was worth 990.19 pesos. Never before has the Argentine currency crossed 1,000 pesos. In one year, the value of this currency against the “greenback”, one of the nicknames of the United States currency, was almost divided by three. In mid-December, the government of ultraliberal President Javier Milei decided to carry out a massive devaluation, increasing the parity from around 366 to 800 pesos per dollar.

This decision aimed to bring the peso closer to its natural rate, measured by the “blue dollar”, that is to say the exchange rate on the parallel market. “Despite the devaluation, the disparity (between official and parallel rates) persists,” commented Andres Abadia, chief economist for Latin America at Pantheon Macroeconomics. According to several specialized sites, the parity reached around 1,170 pesos per dollar on Thursday on the unofficial market. “We need to do more,” said Andres Abadia. “The gap still reflects capital controls and a lack of confidence in the Argentine peso.”

As it stands, the government maintains strict control of its currency, which it only allows to fall by 2% per month. This measure was taken in a context of soaring inflation, which rose to almost 300% in the spring. Prices have slowed significantly in recent months, but they remain up 209% year-on-year. “There is progress, but it may not be enough without additional structural reforms,” warns Andres Abadia. The Milei government imposed austerity on Argentina, with the aim of reducing the deficit and restoring public finances.

Through drastic cuts, it has managed to achieve a budget surplus for several months. This extreme budgetary orthodoxy has sparked several social protest movements. For the economists at Pantheon Macroeconomics, the conditions for an economic rebound are ripe. They are counting on growth of 3% in 2026. However, “economic activity remains under pressure”, underlines Andres Abadia, for whom “the recovery may not materialize as quickly as hoped”.

Are you already following us on WhatsApp?