In 2024, the Argentine peso showed the highest level of strengthening among all world currencies. In accordance with data Financial Times, its value rose by 44.2% in real terms against a basket of trading partner currencies, even accounting for triple-digit inflation in Argentina. This is more than double the results of the Turkish lira, which took second place at 21.2%.
The increase in the value of the peso affected both the official and the illegal exchange market. In 2024, the average salary of Argentines in dollar terms at the so-called “dollar-blue” parallel exchange rate almost doubled, reaching $990. Up until this point, the peso had continuously depreciated for seven years. An important result was the reduction of the difference between the official and parallel courses: from 200% in December 2023 to less than 20% in October 2024.
The economic policy of President Javier Millay, who led the country a year ago, became a key factor in this strengthening. His bid for austerity and maintaining currency controls imposed by the previous government stabilized the peso after a devaluation in December 2023. Although the peso has lost 18% of its value since the start of the year due to inflation at 112%, measures, including allowing exporters to convert some of their earnings at more favorable rates, have supported the currency’s stability.
Despite the positive results, the peso’s strengthening has raised concerns among experts and the business community. The high exchange rate has greatly increased the cost of labor, which has increased by 60% compared to Brazil. This negatively affects the competitiveness of the Argentine economy. In addition, the Central Bank of the country is facing difficulties due to practically empty foreign exchange reserves, which are spent to support the exchange rate of the peso.
Analysts warn that further currency appreciation or external shocks such as new US tariffs could lead to a sudden devaluation. This situation could increase pressure on the peso, especially in the face of growing demand for dollars.
President Miley plans to fulfill his promise in 2025 by removing currency restrictions and allowing the peso to float. Experts believe that this policy could become a serious challenge for the Argentine economy, which historically has not been able to maintain a strong exchange rate with low foreign exchange reserves.
Former Economy Minister Nicolas Duchovny believes that maintaining a stable peso rate is possible only with strict financial discipline that will strengthen market confidence. However, in the long term, further strengthening of the peso seems unlikely without drastic economic reforms.
Although President Millay’s program has shown positive results in 2024, the future of the Argentine currency remains uncertain, especially against the background of internal and external economic risks.
