Buenos Aires — The devaluation of the official exchange rate by the Argentine government after the primary elections in August and the government’s agreement with the International Monetary Fund (IMF) have not improved the local currency’s outlook among international banks.
Bank of America is bearish on Argentina and argues that “net foreign exchange reserves (of the central bank) are still in negative territory and the parallel gap widened despite the recent devaluation”.
Amid this scenario, the bank projects an official exchange rate of 615 pesos to the US dollar by the end of 2023, which would imply an additional devaluation of 43%, added to the 18% on August 14, which took the official dollar to 350 pesos.
Sergio Massa, economy minister and presidential candidate for the Unión por la Patria coalition, said that there will be no movements in this regard until the end of October.
The elections will take place on October 22.
However, Massa assured that by providing for a devaluation just below 20%, the IMF demanded an even greater correction. This, added to the level of reserves and the fact that the exchange rate gap remains above 100%, has led market analysts to point out that there will be a larger devaluation toward the end of this year.
BBVA analysts go even further however, and on August 31 updated their projections and estimated that by the last quarter of this year the official dollar will reach 650 pesos.
This projection implies that the peso should devaluate by 46% more before the end of 2023.
Other banks, on the other hand, have been more conservative in their projections. On August 25, Wells Fargo analysts indicated that they expected the official exchange rate to reach 485 pesos in the last quarter, while just three days before, Standard Chartered projected that it would reach 490 pesos.
Projections for the peso among foreign banks:
