Pimco Urges Milei to Let the Peso Float While ‘Times Are Good’

[old fart]

As Javier Milei prepares to meet with investors in New York on Friday, fund giant Pacific Investment Management Co. has a clear message for the Argentine president: Let the peso float freely.

Milei should take advantage of his party’s major win in congressional midterms and strong backing from the Trump administration to remove the band system that limits the currency’s moves, according to Pramol Dhawan, Pimco’s head of emerging markets portfolio management.

The libertarian leader is scheduled to meet foreign investors at the Council of the Americas on Park Avenue in Manhattan, alongside Economy Minister Luis Caputo, who himself is a Wall Street veteran.

The fund manager, speaking to journalists Thursday, said he would be blunt with the Argentine policymakers. “I highly advise you to free float your currency. I highly advise you whilst times are good, if you want to break the backdrop of boom and bust.”

Dhawan added: “Foreign investors like ourselves will not invest in local assets at these levels of currency. Period. Full stop.”

https://www.bloomberg.com/news/articles/2025-11-07/pimco-urges-milei-to-let-the-peso-float-while-times-are-good?embedded-checkout=true

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[Uncle Wong]

Many seem to say the peso is still way overvalued.

 

[Blockchain]

“Foreign investors like ourselves will not invest in local assets at these levels of currency. Period. Full stop.”

PIMCO is huge. They couldn't be more clear about the valuation. Crapload of debt to pay in January.

 

[GlasgowJohn]

Milei says he is for freedom and little control but he controls the value of the peso....

 

[TonyTigre]

Sometimes you have to fight fire with fire, you have to fight manipulation with manipulation. The band system is a good and necessary intermediate step. There is not a single currency in the world that isn't manipulated one way or another.

I have no idea what the exchange should be, and neither does anyone else. Clearly most who think the peso is overvalued would benefit from a weaker peso. With such conflict of interest, how can we be certain our belief that the peso is overvalued is actually true. What is that belief based on? Just by comparing the current exchange rate from another point in history? At the point in history that you are comparing against, perhaps the peso was undervalued. Even if you can determine that point to be a truly fair valued rate, which you probably can't, are you able to compare all the events of each country between that point and now to justify whatever you want the exchange rate to be now? If you can, I would love to see that analysis.

I believe Milei's team is doing exactly what needs to be done and balancing the various priorities very well. Sure there have been protests and many people complaining, but it has certainly been more calm than most expected. Also, what PIMCO wants and when they want it, isn't necessarily what's best for Argentina. Milei's administration has been willing to go against what many want, when they want it, in order to do what is right for Argentina in the long run. He has also been willing to make some compromises in order to maintain enough support to achieve his long term goals.

 

[Blockchain]

Sometimes you have to fight fire with fire, you have to fight manipulation with manipulation. The band system is a good and necessary intermediate step. There is not a single currency in the world that isn't manipulated one way or another.

I have no idea what the exchange should be, and neither does anyone else. Clearly most who think the peso is overvalued would benefit from a weaker peso. With such conflict of interest, how can we be certain our belief that the peso is overvalued is actually true. What is that belief based on? Just by comparing the current exchange rate from another point in history? At the point in history that you are comparing against, perhaps the peso was undervalued. Even if you can determine that point to be a truly fair valued rate, which you probably can't, are you able to compare all the events of each country between that point and now to justify whatever you want the exchange rate to be now? If you can, I would love to see that analysis.

I believe Milei's team is doing exactly what needs to be done and balancing the various priorities very well. Sure there have been protests and many people complaining, but it has certainly been more calm than most expected. Also, what PIMCO wants and when they want it, isn't necessarily what's best for Argentina. Milei's administration has been willing to go against what many want, when they want it, in order to do what is right for Argentina in the long run. He has also been willing to make some compromises in order to maintain enough support to achieve his long term goals.

Isn't the belief the peso is overvalued simply because there is so much intervention? What would the exchange rate be with NO intervention? That would seem to be to be fair value. Whatever the rate goes to without all of the bail outs and interference. Because all of that is probably delaying the inevitable. Agree with you Tony that I don't know either but it seems like there is a lot of extreme bail outs and without them things would be different.

 

[Uncle Wong]

Milei says he is for freedom and little control but he controls the value of the peso....

It seems like he is just stuck on this. Damned if he does and damned if he doesn't because it seems like the only way to control inflation is keeping an artificially high exchange rate.

The problem is that it seems like every 6 months Argentina needs a big bail out. That does not seem sustainable to me but I dont know Argentina too well.

Sometimes you have to fight fire with fire, you have to fight manipulation with manipulation. The band system is a good and necessary intermediate step. There is not a single currency in the world that isn't manipulated one way or another.

I have no idea what the exchange should be, and neither does anyone else. Clearly most who think the peso is overvalued would benefit from a weaker peso. With such conflict of interest, how can we be certain our belief that the peso is overvalued is actually true. What is that belief based on? Just by comparing the current exchange rate from another point in history? At the point in history that you are comparing against, perhaps the peso was undervalued. Even if you can determine that point to be a truly fair valued rate, which you probably can't, are you able to compare all the events of each country between that point and now to justify whatever you want the exchange rate to be now? If you can, I would love to see that analysis.

I believe Milei's team is doing exactly what needs to be done and balancing the various priorities very well. Sure there have been protests and many people complaining, but it has certainly been more calm than most expected. Also, what PIMCO wants and when they want it, isn't necessarily what's best for Argentina. Milei's administration has been willing to go against what many want, when they want it, in order to do what is right for Argentina in the long run. He has also been willing to make some compromises in order to maintain enough support to achieve his long term goals.

Agree with you Tony that it is probably impossible to know what the real value is. But with 2% a month inflation still going on or maybe even higher makes me wonder what will happen to the value of the peso.