Investors push Argentina for flexible peso amid reserve, FDI concerns

Investors are urging Argentina's government to allow greater flexibility in its foreign-exchange regime, saying a more dynamic peso would help rebuild reserves and sustain foreign investment, even as top officials insist the current band system will remain unchanged.

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President Javier Milei and Economy Minister Luis Caputo have repeated that they will defend the existing framework of daily peso adjustments within a widening band. The policy is said to be in place through the 2027 presidential election, in which Milei is expected to seek reelection. Yet money managers say Milei’s reluctance to let the peso float risks constraining growth and foreign currency inflows at a time when Argentina is trying to consolidate stability after last month's stronger-than-expected ruling-party performance in the midterm election.

"From a fundamental perspective, some sort of adjustment is likely needed to organically build FX reserves into 2026," said Kathryn Exum, co-head of sovereign research at investment manager Gramercy. "The authorities can probably muddle through without an immediate change, but that would undershoot expectations and could make things more challenging from a country-risk premium perspective."

Exum said a gradual widening of the official band, currently designed to widen by 1% per month.