Dollar: After a Month of Stability, the Market Identifies a New Risk Front for August

After a July that ended without currency shocks and with a limited variation of the official dollar in the wholesale segment, the market began to recalibrate its expectations for August. While during the last month the exchange rate was conditioned by seasonal factors, such as lower agricultural liquidation, the payment of bonuses, winter vacations, and the increase in energy imports, attention now seems to shift towards the international scenario and the consistency of the economic program promoted by the Government.

The consensus among analysts is that a good part of the domestic factors have already been absorbed by prices. In this regard, the local evolution of the price of the US dollar now seems to depend more on its strength globally, the behavior of regional currencies, and the ability of the economic team to sustain the three main macroeconomic anchors: the exchange rate, the fiscal, and the monetary.

In this line is Andrés Reschini, from F2 Financial Solutions. "For now, the most likely scenario for the exchange rate in August will be a performance linked to the international context," he assured in a dialogue with Ámbito. "I believe the market has taken enough coverage for the current conditions," added the specialist, who understands that, barring any surprises in the political scenario, there are no reasons to think that the exchange rate could jump due to internal factors, although he also does not see a real exchange rate tending to appreciate further.

A Package to Reinforce the Anchors

The last week also left signals that were well received by the City. The Government announced a broad package of monetary, fiscal, and financial reforms aimed at consolidating the stabilization process. Among the main initiatives is the reform of the Organic Charter of the Central Bank (BCRA), which seeks to return an exclusive mandate of price stability, prohibit monetary financing to the public sector, and limit the transfer of profits to the Treasury.

In turn, the proposal is part of a broader scheme aimed at reducing the possibility that future fiscal imbalances will be financed through monetary issuance, one of the main factors behind the inflationary processes that Argentina has gone through in recent decades.

For Eric Ritondale, chief economist at Puente, the project represents a significant institutional advance, although its impact will depend on the political support it receives.

The BCRA closed July with over $2.1 billion in purchases, but reserves ended below $48 billion.

"The initiative directly aims to reduce the risk of fiscal dominance and strengthen the long-term monetary anchoring. However, the market will continue to evaluate the final design of the escape clauses and the ability to sustain these rules beyond the current administration," he explained.

Furthermore, the Puente research team emphasized that the explicit backing of the International Monetary Fund (IMF) for the economic program helped to strengthen the credibility of the official strategy. The international organization highlighted both the deceleration of inflation and the process of accumulating reserves, encouraging the monetary authority to continue purchasing foreign currency to bolster its financial position.

However, some experts warned that the sustainability of the scheme will depend on whether the government of Javier Milei can maintain fiscal balance, uphold the accumulation of international assets, and consolidate the new institutional rules regarding the Central Bank sent to Congress.

The auction once again absorbed pesos
Recently, the Ministry of Economy allocated $12.21 trillion against maturities of $8.5 trillion, resulting in a rollover of 144.5% and becoming another factor that helped to moderate exchange rate expectations. Beyond the financial outcome, the market highlighted the strong effect of liquidity absorption that the operation produced.

Puente pointed out that the auction withdrew a greater amount of pesos than suggested by the liquidity conditions of the system, something that was immediately reflected in the overnight rate increase during Thursday and, to a lesser extent, this Friday.

The report also indicated that the fixing corresponding to the maturity of the Lelink from July generated a specific pressure on the foreign exchange market during Tuesday, although this began to dissipate from the Wednesday session.

This combination of a lower amount of circulating pesos, positive real rates, and active liquidity management appears to be one of the main arguments the market considers to rule out, for now, an abrupt movement in the exchange rate.

Provinces Take Advantage of Credit Reopening
While the Government avoids returning to the international market with sovereign issuances, both companies and provinces are taking advantage of the improved perception of Argentinian risk.

Alan Versalli, strategist at Cocos, highlighted that since November 2025, six jurisdictions have issued nearly $4.9 billion in external debt, marking the highest pace of placements since 2017. The journey began with Córdoba and continued with issuances from CABA, Santa Fe, Entre Ríos, Chubut, and recently, Neuquén, whose seven-year placement achieved a rate of 7.35%, the lowest obtained by an Argentinian province in this cycle. Soon, the province of San Juan will also follow suit.

Additionally, the recent improvement in Moody's ratings for eleven subnational governments came after the agency upgraded Argentina's sovereign rating. However, the U.S. agency also warned that over the next 12 to 18 months, the fiscal performance of the provinces could show greater heterogeneity due to lower revenue growth and reduced national transfers.

The World Takes Center Stage

The evolution of the dollar globally, the upcoming decisions of the Federal Reserve (Fed), the behavior of the Brazilian real, and the mood of the international markets emerge as the main elements capable of modifying the exchange rate trajectory during August.

In parallel, investors will closely follow the legislative discussion of the reforms announced by the Government. At Puente, they believe that the Executive's ability to build consensus in Congress will be one of the main challenges in the coming weeks. If the restrictions on monetary financing and the fiscal rule maintain credible enforcement mechanisms, they believe that it could strengthen stability expectations, reduce the perception of fiscal dominance, and contribute to consolidating the disinflation process.

In the financial realm, Juan Manuel Franco, chief economist of Grupo SBS, considered that the market will monitor both the international context and the local macroeconomic evolution.

"July closed with a Merval gaining nearly 3% monthly measured at CCL, in a month marked by international volatility. Sovereign bonds also received a boost following Moody's upgrade," he explained. He added: "Moving forward, the market's focus will remain on international fluctuations, but also on domestic macro and various factors that will gain weight as we approach the electoral cycle of 2027."

The prevailing expectation among experts is that, as long as the Government maintains fiscal balance, absorbs liquidity, and preserves the process of reserve accumulation, the internal dynamics will play a secondary role in the evolution of the exchange rate.

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