If the Argentina peso is truly overvalued

[MikeYoung]

Peso is definitely overvalued and should depreciate quicker now that Milei changed it to match inflation.

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archive.ph

Doesn't the fact that Milei is forced to do this show that the peso was overvalued?

 

[Tango]

Argentina sells dollars to curb peso slide as new rules kick in

Argentina’s Treasury sold dollars Friday, looking to limit the decline of the peso on the first day that new FX rules kicked in.

batimes.com.ar

I honestly don't understand how the government will ever build up their USD reserves. When they have debt do it seems like they get more debt to pay off that debt. They don't have the money to pay off these older loans.

IMF targeted goals are poorly met and not even close. IMF also wants them to have low inflation and at the same time build up USD reserves. It is great people have hope for the first time in a while but the math doesn't seem to be mathing.

 

[Blockchain]

Maybe the approval of the Mercosur/European Union free trade agreement will bring in more export income for Argentine. I read they were trying to get this passed for the past 2 decades.

EU-Mercosur deal wins approval after overcoming French opposition

Majority of the European Union's 27 nations backed the pact at an ambassadors' meeting in Brussels.

www.batimes.com.ar

 

[TonyTigre]

In December, just after a couple of months, Argentina repaid the US$ 2.5 billion drawdown from the US$ 20 billion currency swap facility with the United States Treasury.
This could mean it will be harder for future attempts to manipulate the peso lower just like right before the election last year. That's because anyone attempting to pile on to bet the peso will go lower after any drop would face the risk of Argentina drawing on that $20 billion currency sway facility again. By repaying it so quickly, any previous criticism from US lawmakers basically became moot as it's clearly a big success and a great use of the funds. Of course there will continue to be fluctuations in the exchange rate, but I suspect it will be at a tighter range going forward, meaning it might not deviate from the official rate too much. Such stability would be very good for the country.

I know that's not good news for those hoping for a devaluation, especially one forced by the US / IMF. That's not to say it won't happen again in the future, but it certain seems unlikely in the near future now.

 

[Betsy Ross]

In December, just after a couple of months, Argentina repaid the US$ 2.5 billion drawdown from the US$ 20 billion currency swap facility with the United States Treasury.
This could mean it will be harder for future attempts to manipulate the peso lower just like right before the election last year. That's because anyone attempting to pile on to bet the peso will go lower after any drop would face the risk of Argentina drawing on that $20 billion currency sway facility again. By repaying it so quickly, any previous criticism from US lawmakers basically became moot as it's clearly a big success and a great use of the funds. Of course there will continue to be fluctuations in the exchange rate, but I suspect it will be at a tighter range going forward, meaning it might not deviate from the official rate too much. Such stability would be very good for the country.

I know that's not good news for those hoping for a devaluation, especially one forced by the US / IMF. That's not to say it won't happen again in the future, but it certain seems unlikely in the near future now.

I would still rather keep my savings in dollars vs. pesos. I've been in Argentina 13+ years and it's never paid to hold pesos over dollars.

 

[Finance Prof]

In December, just after a couple of months, Argentina repaid the US$ 2.5 billion drawdown from the US$ 20 billion currency swap facility with the United States Treasury.
This could mean it will be harder for future attempts to manipulate the peso lower just like right before the election last year. That's because anyone attempting to pile on to bet the peso will go lower after any drop would face the risk of Argentina drawing on that $20 billion currency sway facility again. By repaying it so quickly, any previous criticism from US lawmakers basically became moot as it's clearly a big success and a great use of the funds. Of course there will continue to be fluctuations in the exchange rate, but I suspect it will be at a tighter range going forward, meaning it might not deviate from the official rate too much. Such stability would be very good for the country.

I know that's not good news for those hoping for a devaluation, especially one forced by the US / IMF. That's not to say it won't happen again in the future, but it certain seems unlikely in the near future now.

Now if they can make progress on the rest of the debt to the IMF. 🤣

 

[TonyTigre]

I would still rather keep my savings in dollars vs. pesos. I've been in Argentina 13+ years and it's never paid to hold pesos over dollars.

@Betsy Ross, I totally agree with you, but I would add that I prefer gold over dollars. And just to get more responses, I will also add that I prefer gold over crypto. 🙂

The peso and Argentina has a long way to go to earn back its credibility. I just believe that the relative restraint of the Blue Dollar rate is worth paying attention to and it would be informative and interesting to figure out why that's happening. I still haven't gotten an answer with a plausible theory on that yet. Whenever people say "everyone" believe something is overvalued or undervalued, it usually result in pricing or rates that are not inline with fundamentals. They overshoot on its way up and on its way down. Can anyone argue that the Blue Dollar rate didn't overshoot in 2023? If it did, then how much did it overshoot by?

 

[Wally]

@Betsy Ross, I totally agree with you, but I would add that I prefer gold over dollars. And just to get more responses, I will also add that I prefer gold over crypto. 🙂

The peso and Argentina has a long way to go to earn back its credibility. I just believe that the relative restraint of the Blue Dollar rate is worth paying attention to and it would be informative and interesting to figure out why that's happening. I still haven't gotten an answer with a plausible theory on that yet. Whenever people say "everyone" believe something is overvalued or undervalued, it usually result in pricing or rates that are not inline with fundamentals. They overshoot on its way up and on its way down. Can anyone argue that the Blue Dollar rate didn't overshoot in 2023? If it did, then how much did it overshoot by?

My gold has finally paid off! It took a while but my dad always told me that it would be a good store of value. Speaking of gold @TonyTigre do we even know where all the gold Argentina has is? No one knows if it is or isn't overvalued. I stick with Betsy's advice to hold savings in dollars. One trigger or event in Argentina can spike it either way. I do think it was overvalued before and why the government changed the policy and increased the band to match inflation. It sounds like the IMF was pushing for that. Ultimately they probably have the biggest say in if the peso is overvalued or not. If it wasn't overvalued, the government probably wouldn't have changed their policy on how much it will go up each month.

 

[Bingo]

Now if they can make progress on the rest of the debt to the IMF. 🤣

Exactly. They owe so much. Until they can build up their USD reserves AND pay off their IMF debt they will still have problems in the future.

@Betsy Ross, I totally agree with you, but I would add that I prefer gold over dollars. And just to get more responses, I will also add that I prefer gold over crypto. 🙂

The peso and Argentina has a long way to go to earn back its credibility. I just believe that the relative restraint of the Blue Dollar rate is worth paying attention to and it would be informative and interesting to figure out why that's happening. I still haven't gotten an answer with a plausible theory on that yet. Whenever people say "everyone" believe something is overvalued or undervalued, it usually result in pricing or rates that are not inline with fundamentals. They overshoot on its way up and on its way down. Can anyone argue that the Blue Dollar rate didn't overshoot in 2023? If it did, then how much did it overshoot by?

I don't think it matters too much one way or another. If you notice from many of the expat websites and Facebook forums, many expats left Argentina already. They felt like the peso was overvalued and too expensive and left. The same is happening with tourism. 2025 tourism was done a lot. I can't remember the exact number but I remember reading over 25% down from previous years.

Most smart people just would rather not keeping their savings in pesos instead of dollars. While I don't think they will dollarize anytime soon, I also don't think the majority will trust the peso with their savings until Argentina has a few years of stability.

 

[lemonade]

I don't think it matters too much one way or another. If you notice from many of the expat websites and Facebook forums, many expats left Argentina already. They felt like the peso was overvalued and too expensive and left. The same is happening with tourism. 2025 tourism was done a lot. I can't remember the exact number but I remember reading over 25% down from previous years.

Good point. Tourism is down big time. This time last year there were tons of tourists. I just don't see that now. I never have to wait in line at Don Julio's anymore. I can get into popular places the same day now with no reservation. That didn't happen even last year. Many expat friends moved out of BA and more and more are leaving for Spain or to the US.

If things were so good you wouldn't see this happening. The cost of living for my friends that have children are almost at a breaking point and they tell me tuition keeps going up. Buenos Aires has exceeded Spain for cost of living. Salaries in Spain are also low but I still have friends that are moving there soon.

 

[Piranha]

The peso and Argentina has a long way to go to earn back its credibility

That is putting it mildly. A long long way to go.

 

[Piranha]

In December, just after a couple of months, Argentina repaid the US$ 2.5 billion drawdown from the US$ 20 billion currency swap facility with the United States Treasury.
This could mean it will be harder for future attempts to manipulate the peso lower just like right before the election last year. That's because anyone attempting to pile on to bet the peso will go lower after any drop would face the risk of Argentina drawing on that $20 billion currency sway facility again. By repaying it so quickly, any previous criticism from US lawmakers basically became moot as it's clearly a big success and a great use of the funds. Of course there will continue to be fluctuations in the exchange rate, but I suspect it will be at a tighter range going forward, meaning it might not deviate from the official rate too much. Such stability would be very good for the country.

I know that's not good news for those hoping for a devaluation, especially one forced by the US / IMF. That's not to say it won't happen again in the future, but it certain seems unlikely in the near future now.

It might also be that Milei is getting a little breathing room. Remember that China already has a debt swap in place that is much bigger than what they have with the US. China is a more important trading partner also and Milei is going there later this year.

Argentina’s Milei plans 2026 China trip despite US pressure on ties

Leader cites China as a key trade partner, underscoring a sharp shift from his 2023 campaign attacks to a more pragmatic stance.

www.scmp.com

 

[VINO]

That is putting it mildly. A long long way to go.

Good video on Why Argentina's economy is such a mess by the Economist.

 

[Nasdaq]

Good video on Why Argentina's economy is such a mess by the Economist.

I have seen this video before. It came out earlier but probably doesn't matter when you play it. Argentina has the same problems as usual. Until IMF debt goes down, reserves go up and more laws change not sure it will matter.

I still can't believe that locals get charged a higher exchange rate to pay for their Netflix and to use their credit cards outside of Argentina. You probably know things are really getting better once this stops.

Dólar hoy, cotización del dólar, precio del dólar, dólar blue, precio histórico del dólar, valor del UVA | Dolarito.ar

Seguí la cotización del dólar minuto a minuto, compara cotizaciones, visualiza los valores históricos, conocé el precio del dólar, evolución del valor UVA

www.dolarito.ar

 

[Cheap Bastard]

If the Argentina peso is truly overvalued, why is the blue dollar rate lower than CCL, MEP, and Official? Didn't people used to say the Blue rate is the one not manipulated by the government?

At the moment of posting the rates are:
Blue 1425
CCL 1512
MEP 1475
Official 1463

FYI, Western Union tracks the CCL , not the Blue rate as many continue to mistakenly believe.

It sure sounds like the government and Milei are still trying to prop up the peso.

Milei still props up peso despite looser trading rules | Buenos Aires Times

in Bloomberg too

https://www.bloomberg.com/news/articles/2026-01-13/ars-usd-argentina-peso-gets-milei-intervention-despite-looser-trading-rules

 

[Good Stuff]

I have seen this video before. It came out earlier but probably doesn't matter when you play it. Argentina has the same problems as usual. Until IMF debt goes down, reserves go up and more laws change not sure it will matter.

I still can't believe that locals get charged a higher exchange rate to pay for their Netflix and to use their credit cards outside of Argentina. You probably know things are really getting better once this stops.

View attachment 10191

Dólar hoy, cotización del dólar, precio del dólar, dólar blue, precio histórico del dólar, valor del UVA | Dolarito.ar

Seguí la cotización del dólar minuto a minuto, compara cotizaciones, visualiza los valores históricos, conocé el precio del dólar, evolución del valor UVA

www.dolarito.ar

Most don't get charged that, they buy using mep or use dollar app. The ones who pay for Netflix with the augmented foreign number are the ones who never get ahead.

 

[Blockchain]

The ones who pay for Netflix with the augmented foreign number are the ones who never get ahead.

What % of the population are the ones that never get ahead in Argentina? I thought that was the majority of the population?

 

[LongIslander]

The peso and Argentina has a long way to go to earn back its credibility.

It seems like they are just trying to buy some time but it seems like the structural problems of solvency still remain and full access to international credit market is still dead. Just buying time.

Préstamo REPO, tasa y haircut: ¿qué señales dejó la estructura de la operación sobre el riesgo argentino?

Las entidades aplicaron un descuento o haircut del 40% al Gobierno, por el cual el BCRA debió dejar bonos por u$s5.000 millones como garantía para recibir los u$s3.000 millones pactados.

www.ambito.com

 

[Finance Prof]

It seems like they are just trying to buy some time but it seems like the structural problems of solvency still remain and full access to international credit market is still dead. Just buying time.

Préstamo REPO, tasa y haircut: ¿qué señales dejó la estructura de la operación sobre el riesgo argentino?

Las entidades aplicaron un descuento o haircut del 40% al Gobierno, por el cual el BCRA debió dejar bonos por u$s5.000 millones como garantía para recibir los u$s3.000 millones pactados.

www.ambito.com

Argentina's peso was the worst performing currency in the emerging markets so all of you that kept saying the peso wasn't overvalued last year were wrong. Turns out it was overvalued and probably still is.

The government is pulling out all kinds of tricks to keep it from sinking further.

Milei insiste en sostener al peso, pero a un alto costo

Las autoridades han aumentado a niveles récord las ventas de títulos atados al tipo de cambio oficial, conocidos como dólar linked.

www.bloomberglinea.com

 

[Surfer]

Argentina's peso was the worst performing currency in the emerging markets so all of you that kept saying the peso wasn't overvalued last year were wrong. Turns out it was overvalued and probably still is.

The government is pulling out all kinds of tricks to keep it from sinking further.

Milei insiste en sostener al peso, pero a un alto costo

Las autoridades han aumentado a niveles récord las ventas de títulos atados al tipo de cambio oficial, conocidos como dólar linked.

www.bloomberglinea.com

Yes those that tried to argue the peso wasn't overvalued last year saw the peso fall throughout this year. Can't imagine it won't keep falling with inflation being what it is.