The central bank’s announcements were received very positively by the markets, with stocks and especially dollar bonds rising. There are two strong signals that investors value: Reserve building is becoming a priority for the government and it wants to prevent the exchange rate from falling behind again due to the inflow of foreign exchange expected in 2026.
The upper limit of the exchange rate band is adjusted by 2.5% in January, like the November index. And in February it will move according to the data reported for December. This is the first noticeable consequence of the changes decided yesterday, which will come into force at the beginning of 2026.
With this change, the band’s cap will increase from $1,527 at the end of the year to $1,565 by the end of January. The Economist Fernando Marullus pointed out By the end of next year, a level of $1,860 would be reached, taking into account 20% inflation for all of 2026.
The acceleration of January’s monthly rise from 1% to 2.5% gives the central bank important room to buy reserves in the market without the immediate threat of the dollar quickly reaching the band’s upper limit.
Higher foreign exchange income is expected, especially from the end of the yearboth due to the liquidation of the good harvest (in a record year for wheat) and the sale of the almost 6,000 million US dollars that companies and provinces received in international markets through the placement of bonds.
At the same time, demand for dollars for hoarding by the private sector fell to just $200 million in November, leaving room for the central government to purchase market surpluses. As the company said in a statement, The basic goal is to purchase around $10,000 million by issuing pesos.
In this way, The plan to remonetize the economy is making progress. It is expected that the improvement in economic activity will also increase the demand for pesos and therefore there will be no impact on inflation due to the increased money supply.
The BCRA did not rule out that the dollar purchase could even increase to $17,000 million, However, this depends on two factors: that the demand for pesos increases by 1% of additional GDP and that the supply of balance of payments flows allows this. In other words, the dollar surplus must be so large that accumulation on this scale is possible.
Strengthening the central bank by accumulating reserves is one of the measures most demanded by investors in recent months. This is a key aspect of being able to cushion the impact of possible external shocks on financial variables, particularly the exchange rate. Net reserves remain negative, reflecting a very weak situation.
In the meantime, The Treasury is taking advantage of the opportunity to accumulate dollars, which in this case will be used to pay off debts due on January 9th. Yesterday it was around $300 million. According to market sources, this allowed reserves to exceed $42 billion.
One of the questions is whether the combination of a greater expansion of monetary aggregates and ultimately a faster adjustment of the exchange rate is possible The change will impact the forecast decline in inflation in the order of 20 percent for 2026.
The economic team clearly expects inflation to resume its downward trend after hitting a low in November. However, the question remains whether, despite these changes in the rules of the game, it will be possible to reduce this level from 30% to 20% from one year to the next.
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