Dollar: Government maintains exchange barrier and the city projects a moderate increase by the end of the year

The wholesale dollar has moved away from $1.500, a level that has consolidated as a central reference for the market in recent weeks and that the city identifies as a sort of short-term barrier. At the same time, the counterpart of this exchange stability is becoming clearer with increasing pressure on interest rates in pesos, which have shown tension again.

On Friday, the wholesale exchange rate fell by $4.50 to $1,487.50 for sale, its lowest level since late July, after having accumulated two consecutive days of increase. Thus, it remained 24.9% below the ceiling of the exchange band, set at $1,858.35.

At Banco Nación, the bill dropped $5 to $1,510 for sale, while the card dollar stood at $1,963. The retail average reported by the Central Bank closed at $1,512.59. Among the parallel rates, the blue dollar rose $5 to $1,545, while the cash with settlement operated around $1,583 and the MEP was near $1,521.

The drop in the dollar has a counterpart: interest rates are rising again.

While the exchange rate remained contained, liquidity in pesos has become more expensive again. "Liquidity has become more expensive and this is already reflected in both repos and institutional fixed terms, which have reached a TNA close to 25%,” explained a market source. Under this scenario, they added, "the TAMAR should continue to adjust upwards in the coming days."

The dynamics reflect the complexity faced by the economic team to maintain three objectives at the same time: keeping the dollar contained, managing interest rates, and continuing to accumulate reserves.

In recent weeks, the Central Bank and the Treasury have increased their participation in different segments of the market to avoid greater exchange rate volatility.

The most evident signal was the slowdown in the pace of dollar purchases by the BCRA. After acquiring an average of u$s103 million daily during July, the monetary authority reduced that figure to around u$s33 million per day during August.

The lower official demand for foreign currency seeks to avoid adding buying pressure in the exchange market and contribute to keeping the wholesale rate below $1,500.

From the consulting firm 1816, they pointed out that the decision to mark that level as a short-term reference also had consequences on other market segments. They explained that the strategy affected the performance of Argentine dollar-denominated debt, which lagged behind other emerging markets.

The Central Bank is not limited to moderating its reserve purchases. In parallel, it operates in future dollar contracts and bonds linked to the exchange rate, while seeking to maintain a certain level of short rates in the repo market. The goal is to prevent excess liquidity from leading to greater demand for dollars.

In recent weeks, a more active participation from the Treasury has been added to this strategy, both in the exchange market and in the daily management of pesos.

According to Outlier, the Ministry of Economy intervenes specifically in the spot market, manages debt auctions, and has begun to use Treasury deposits in banks as a tool to regulate liquidity. An example was observed in the last debt placement in July. The Treasury raised about $4 trillion above maturities, but did not immediately deposit those funds in the Central Bank.

Instead, it kept a good part of the pesos within the banking system, avoiding withdrawing all that liquidity from the monetary base immediately.

The scheme seeks to find a balance: if too many pesos are withdrawn, rates may rise sharply; if too much liquidity is left available, the risk increases that those funds will seek coverage in dollars.

From Outlier, they warned that the complexity of the mechanism also generates uncertainty among operators, who try to determine which of the objectives ---liquidity, rates, or exchange rate--- has priority at each moment.

Despite the tensions generated by liquidity management, exchange rate expectations remain relatively anchored. The latest edition of the LatinFocus Consensus Forecast, which gathers estimates from over 50 banks and international consulting firms, projected a wholesale dollar of $1,648.10 by the end of 2026.

If we take Friday's close at $1,487.50 as a starting point, the estimate implies an increase of around 10.8% for the remainder of the year.

A practically identical forecast appears in the latest Market Expectations Survey (REM) from the Central Bank. The consensus of analysts placed the nominal exchange rate at $1,652 for December.

In year-on-year terms, the estimate implies a dollar increase of 14.1% during 2026. The coincidences between both surveys reflect that, for now, the market does not anticipate a sharp jump in the exchange rate in the coming months.

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