The Next Phase of Argentina’s Exchange‑Rate Bands
Starting in early 2026, the Central Bank of the Argentine Republic (BCRA) will adjust the floor and ceiling of its dollar‑exchange band based on the most recent inflation data. This shift means the band could expand by more than 1 % per month – a noticeable increase from the current 1 % crawling‑peg mechanism.
How the Band Update Works
Under the new rule, both the lower and upper limits of the band will be recalibrated by the same percentage as the latest official inflation figure. For example, if inflation for the prior month is recorded at 2.5 %, the band will be widened by that exact amount. The BCRA has not yet clarified whether the adjustment will be a single‑day jump or a gradual rollout throughout the month.
Current Band Landscape
At present, the lower bound sits around ARS 921.20 and the ceiling at ARS 1,518.52, while the market dollar trades near ARS 1,439.30 – roughly 5 % below the BCRA’s selling range. By 2026, the projected floor and ceiling could move to approximately ARS 893 and ARS 1,565, respectively.
These dynamics have already triggered sharp market moves. In the weeks leading up to the October 2025 legislative elections, the dollar spiked to the upper band, prompting the BCRA to sell US$ 1.1 billion in just three days to keep the rate in check.
New Dollar‑Purchase Program: Building Reserves
Alongside the band revision, the BCRA unveiled a plan to accumulate up to US$ 10 billion in foreign reserves during 2026. The strategy hinges on “remonetization” – purchasing dollars when domestic demand for pesos rises, typically after a surge in economic activity.
Key parameters of the program include:
- Daily purchases capped at 5 % of total market turnover, preventing excessive pressure on the exchange rate.
- Flexibility to execute “block purchases” outside the official market, allowing large‑scale deals (e.g., a province refinancing a dollar loan) without distorting prices.
- Conditionality on balance‑of‑payments flows, inflation trajectory, and GDP growth.
Implications for Investors and Businesses
For import‑export firms, a wider band could mean more room for price adjustments but also greater volatility. Companies that hedge currency risk now have a clearer benchmark: the band’s inflation‑linked update will be predictable once the BCRA releases the official CPI figure each month.
International investors should watch two signals closely:
- Reserve build‑up pace: A steady climb toward US$ 10 billion would signal BCRA confidence and may attract capital inflows.
- Band breaches: Repeated touches of the upper limit could foreshadow emergency sales, which historically coincide with short‑term market spikes.
What Other Countries Are Doing
Argentina isn’t alone in using inflation‑indexed exchange bands. Brazil’s “floating band” model, introduced in 2022, adjusts the Real’s ceiling monthly based on the national consumer price index, while maintaining a floor that moves in line with real‑effective exchange rates. The approach has helped Brazil moderate sharp devaluations during periods of high inflation.
For a deeper look at how band systems work worldwide, check our Exchange‑Rate Band Comparisons article.
Frequently Asked Questions
- What is the “crawling peg” that Argentina used before?
- It was a fixed‑rate system where the official dollar price increased by 1 % each month, regardless of inflation.
- How often will the band limits be updated?
- The BCRA says the adjustment will follow the latest available inflation data, typically on a monthly basis.
- Will the new reserve‑building program affect the daily dollar price?
- Purchases are limited to 5 % of daily market turnover, so they should smooth, not shock, price movements.
- Can the BCRA intervene if the dollar hits the upper band?
- Yes – the bank is mandated to sell dollars to pull the rate back within the band.
- Is the band system permanent?
- It is tied to the IMF agreement and can be adjusted if macro‑economic conditions change.
Stay updated on the evolving currency landscape by following reputable sources such as the IMF’s Argentina page and Reuters’ market coverage.
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