"Barclays Plc says the real effective exchange rate should be as much as 30% weaker to stimulate the economy. StoneX and local broker One618 say the peso's excess valuation is closer to 20%. Many other investors and analysts consulted by Bloomberg didn't want to offer a precise estimate, but they agree that, to one degree or another, the peso needs to drop."
"A strong currency was always part of Milei's two-pronged plan - along with fiscal austerity - to tame inflation and stabilize the economy. And while it's been effective in dragging inflation down from over 200% a year ago to 33.6% today, its overvaluation, analysts say, has steadily swelled month after month, sparking jitters in a nation with a long history of devaluations and defaults."
The Argentine peso is widely regarded as overvalued, with estimates that it should weaken between about 20% and 30% to stimulate the economy. A strong currency, combined with fiscal austerity, has helped drag inflation from over 200% to 33.6%, but the appreciating real effective exchange rate has caused import distortions, reduced competitiveness, and economic contraction amid budget cuts. Signs of strain include Argentines shopping abroad and exporters importing domestic staples like beef. Analysts say a larger depreciation is necessary to achieve an IMF-mandated current account surplus near $10 billion, which would imply an exchange rate around 1,650–1,700 per dollar.
Read at Fortune
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