Exchange rate heats up to close August. Is Milei changing strategies?

The U.S. dollar reached an all-time high in Argentina this week, closing at AR$1,512 on Friday, marking the highest nominal level in nearly a month. This significant move comes as the government intervenes whenever the exchange rate nears AR$1,500, a psychological barrier in the floating exchange rate system. For the week, the wholesale dollar remained above AR$1,500 for five consecutive trading days.

This upward trend reflects a 1.7% increase in the wholesale dollar over August, with the most notable gains occurring in the last week. Economist Federico Glustein predicts that tension in the exchange rate will push the wholesale dollar between AR$1,550 and AR$1,470 in September, attributing this to low liquidity in pesos and reduced dollar supply due to seasonal factors like lower agricultural exports.

Joaquín Alvarado from ACM emphasizes that foreign currency from agricultural exports, which typically peak in the first half of the year, will likely decline in September. Despite this, Delphos Investment forecasts that the most challenging months for the dollar will be behind us, projecting a recovery in agricultural sector sales later in the year. The Argentine Treasury, for its part, retains intervention tools such as dollar futures market manipulation to maintain control over the exchange rate.