The INDEC (National Institute of Statistics and Census of Argentina) confirmed on Thursday that July's inflation was 2.1% monthly. This figure not only impacts consumer prices but also the foreign exchange market. With this number, the Central Bank of Argentina (BCRA) has updated the ceiling of the exchange rate band that will rule during September. This mechanism delimits how far the official dollar can move without direct intervention from the monetary authority.
How does the exchange rate band work?
The exchange rate band is a corridor with a floor and a ceiling within which the wholesale dollar (the exchange rate used for foreign trade and interbank operations, not the rate tourists get) fluctuates freely based on supply and demand. If the exchange rate hits the upper limit, the BCRA must sell foreign currency to prevent it from exceeding that level; if it breaks the floor, it buys dollars to support it. This scheme has been in place since April 2025, when currency controls were loosened. Since January 2026, the limits are adjusted daily based on the latest available inflation data, with a two-month lag.
New Values for September
With July's inflation (2.1%), the ceiling of the band will go from $1,879.97 (the value reached at the end of August) to $1,919.45 towards the end of September. Meanwhile, the floor will be located at $724.28, according to the inverse adjustment. These numbers represent an increase of almost $40 compared to the previous month, reflecting a slight acceleration in prices.
| Month | Band Ceiling | Band Floor |
|---|---|---|
| August (close) | $1,879.97 | $724.28 |
| September (close) | $1,919.45 | $724.28 |
Current Dollar Rate and Market Expectations
On Thursday, the wholesale dollar closed at $1,492, while the current ceiling was at $1,861. This means the exchange rate was 20% below the upper limit, one of the widest gaps in the last two months. So far in August, the BCRA moderated its purchases, averaging $26 million daily, compared to $103 million in July, although it has logged eleven consecutive positive trading sessions.
According to the latest Market Expectations Survey (REM), analysts project a wholesale dollar of $1,546 for September, well below the formal ceiling. For December, the median estimate is $1,652, which would imply a year-over-year variation of 14.1%. Therefore, the market does not expect the exchange rate to use the full margin allowed by the band, but rather to remain anchored below inflation.
The band scheme seeks to avoid sudden jumps and provide predictability. Meanwhile, international reserves remain around $49,561 million, close to a seven-year high, showing a solid outlook for Argentina's financial stability.