7/17/2025 - politics-and-society

"Argentina on a Tightrope: Dollar on the Rise, Presidential Veto and Pre-Election Tension"

By Mirko Ferraiolo

"Argentina on a Tightrope: Dollar on the Rise, Presidential Veto and Pre-Election Tension"

📉 The Argentine Peso Weakens Again

In just 10 days, the peso depreciated by 6.75% against the dollar, trading at about

$1,264 per official dollar in the wholesale market. This is one of the sharpest declines

of the year and reflects growing skepticism about the economic and political stability

of the country.

At the same time, the Merval index fell by 2% weekly and lost more than 17% in dollars in

the last month, showing a clear flight of capital towards safer assets.

Presidential Veto: Message or Risk?

President Javier Milei partially vetoed the bill that increased minimum pensions. The measure was presented as a “fiscally responsible” action

in line with commitments to the IMF and the need to maintain the primary surplus.

💬 The government argues that “there is no room” for more spending.

✅ For the markets, it was a signal of economic commitment.

❌ For the opposition and social sectors, it was a provocation.

The decision divided opinions: it calmed investors but ignited political and

social tensions at a key moment.

📊 Real-Time Consequences

The repercussions did not take long to appear. Some of the immediate effects:

1. 💱 More exchange rate volatility: The gap between the official dollar and the

financial dollars (MEP, CCL) is widening, generating greater uncertainty.

2. 📈 Rising inflation: Monthly inflation is projected between 1.8% and 2.1%,

driven by the increase in the dollar and seasonal factors.

3. 💰 Pressure on reserves: The Central Bank continues to fail to accumulate net reserves

steadily. The turbulence could force it to intervene.

4. 🔁 Changes in investor appetite: Interest in short-term peso hedging instruments,

such as fixed terms or T+1 funds, is growing.

Conclusion: Crosswinds

Argentina finds itself once again at a crossroads: it needs to show fiscal order to

the IMF and the markets, but it also faces increasing social unrest and a complex

electoral agenda.

Can this delicate balance be maintained?

The October elections could be a turning point not only politically but also

economically.

We will remain vigilant. Because in Argentina, the economy never rests.

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Mirko Ferraiolo

Mirko Ferraiolo

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