Bank of America expects the Argentine peso to fall to 1,700 per dollar by the end of the year.

Investing.com – Bank of America has a neutral outlook on the Argentine peso, expecting the currency to reach 1,700 pesos per US dollar by the end of 2026 and 1,900 pesos by the end of 2027.

The bank forecasts Argentina’s economy will grow by 3.5% in 2026 and 3.5% in 2027. The 2026 forecast aligns with market consensus, while the 2027 forecast is 40 basis points higher than market expectations.

Bank of America predicts inflation will be 25.5% in 2026, 50 basis points below market consensus; and 13.3% in 2027, 270 basis points below market expectations.

Due to high interest rates during the election period, economic recovery has been slow. Unemployment rose to 7.5% in Q4 2025, and tax revenues declined. Since then, interest rates have decreased, especially for peso-denominated instruments, and the Central Bank of Argentina is buying US dollars.

So far this year, the central bank has accumulated about $3.6 billion and is expected to purchase at least $10 billion in 2026, as demand for the currency is projected to grow from current low levels.

Inflation in January and February rose to 2.9 month-on-month, higher than last year’s average of 2.3%, indicating that inflation is more sticky than expected. The bank partly attributes this to oil price shocks.

Mining, energy, banking, and IT sectors are expected to lead the economic recovery. Higher oil prices benefit Argentina’s external accounts, as the country is a net oil exporter, though this poses a downside risk to growth forecasts.

The Argentine government has delayed plans to re-enter the global bond market, citing yields that are too high relative to fundamentals.

Congress approved labor reforms aimed at making the labor market more dynamic by lowering hiring and firing costs, reducing labor litigation, simplifying collective bargaining, and promoting formal employment.

Bank of America’s medium-term Compass BEER model shows the peso is overvalued by 4.7%, while its long-term Compass FX model indicates an overvaluation of 8.3%.

The bank does not recommend hedging positions on the peso.

This article was translated with AI assistance. For more information, see our Terms of Use.