Since the start of Argentina's new monetary plan, which involves the Central Bank (BCRA) selling dollars from exporters, the FX gap has shrunk from 55% to 42%. Despite this, it hasn't dropped below 40%. The BCRA's strategy has focused on preventing big jumps in the BCS rate rather than aggressively narrowing the gap.

The Blue Chip Swap (BCS) rate has experienced a significant rise from a recent low of 1,070 on May 10 to 1,245 on May 22, marking a 16% jump in just a week and a half.

In these challenging economic times, Argentina's business landscape presents unique complexities, particularly in the realms of international trade, import payments, and export transactions. At Canaccord Genuity, we are committed to offering tailored solutions that address these specific challenges.

Argentina's bold economic reforms continue as President Javier Milei devalued the peso by a staggering 54%, pushing the official exchange rate from $366.5 to $800 pesos per US dollar.

Following the volatile response of the FX market after the primary elections, the Argentine economic and political landscape is in the spotlight. The FX market has remained stable, but Argentina continues to grapple with soaring inflation.

In the August 2023 primaries, outsider and far-right Javier Milei topped the results, with 30.04% of the votes for "Freedom Advances" (LLA).

Argentina has a long and complex economic history, with frequent financial crises and periods of inflation. Since 2011, the government has clamped down on foreign exchange transactions and remittances to control the outflow of capital and protect the value of the Argentine peso.

Argentina has been in discussions with the International Monetary Fund regarding a new program to address growing economic challenges in the country. In meetings last month, Argentine government officials sought to lower a target for net reserve accumulation as it continues to face high inflation and a large debt burden.

Sergio Massa, the Minister of Economy for Argentina announced a USD$1 billion bond buyback last week, as the nation looks to send a positive signal to markets.

Thousands of Bolsonaro supporters stormed government buildings in Brasília. At the moment, Brazil’s insurrection portrays no direct effect on Argentina.

The prediction marks the first time private economists have placed Argentina’s potential inflation above the triple-digit number. This is a level not seen in the country since the early 1990s when hyperinflation damaged its economy.

Last week, Argentina’s congress approved a restructuring deal for $45 billion in debt owed to the International Monetary Fund (IMF). Following two years of negotiations, President Alberto Fernández urged his parliament to approve the deal prior to a payment of $2.8 billion due on March 22. The agreement ultimately removes the threat of an imminent default on $19 billion of repayments due this year. The terms of the agreement require Argentina to gradually reduce the budget deficit over the next three years while curbing central bank money printing in exchange for a four-and-a-half-year grace period on IMF payments.

Argentina’s midterms legislative elections implications on The Blue Chip Swap spread.

This week, we noticed that the difference between the Blue Chip Swap rate and the "official" Argentine Peso/US Dollar exchange rate reached 100%.