Six Signs That the Argentine Peso Is Appreciating Strongly

In 2024, the Argentine peso defied expectations by strengthening over 40% in real terms, making it the best-performing currency globally. This turnaround came after years of relentless depreciation, fueled by economic mismanagement, inflation, and lack of confidence.

Upon assuming office in late 2023, President Javier Milei introduced bold austerity measures and strict currency controls to stabilize the economy. These tough but necessary policies reduced Argentina’s fiscal deficit and restored confidence in the peso, leading to its historic appreciation.

While concerns remain over how long this strength will last, six clear indicators confirm that the peso is currently at its strongest in years.

1. The Peso Has Appreciated More Than 40% in Real Terms

The Argentine peso saw a real-term appreciation of over 40% in 2024, outpacing all other global currencies. This is a remarkable shift from the previous decade of near-constant depreciation.

The appreciation has occurred in both the official exchange market and the black market, where the peso had long been significantly weaker. For the first time in years, confidence in the local currency is gradually replacing the instinctive reliance on U.S. dollars.

2. Inflation Is Declining, Boosting the Peso’s Purchasing Power

Inflation, once the peso’s biggest weakness, has started to cool down. Argentina’s annual inflation rate, which stood at 211% in December 2023, has declined to 193% by October 2024.

While inflation remains high by global standards, the slowdown has prevented further peso devaluation, making the currency more stable than in previous years. As a result, the peso now buys more goods and services than it did a year ago.

3. Argentines Are Spending More Abroad

One of the clearest signs of the peso’s strength is how Argentines are taking advantage of their improved purchasing power internationally.

• More Argentines are traveling to Brazil and Chile for shopping and vacations, as their pesos now stretch further abroad.
• Retail and tourism industries in neighboring countries have reported a surge in Argentine visitors, a stark contrast from previous years when few could afford to travel.
• Middle-class Argentines are prioritizing international spending, as one Patagonian teacher put it: “Now is the time to go, things are cheaper anywhere but here.”

4. Argentines Are Shifting Savings from U.S. Dollars to Pesos

For decades, holding U.S. dollars was the safest financial strategy for Argentines. But now, some are breaking that habit and moving their savings into pesos.

• The stronger peso means dollar savings are losing value in local terms.
• Many have chosen to invest in inflation-linked peso deposits, hoping for better returns than simply holding dollars.
• One Argentine student, Tomás, switched his $10,000 savings into pesos to avoid seeing its value erode against the local currency.

This shift in confidence in the peso as a store of value is a significant indicator of its growing strength.

5. Argentina Is No Longer a Budget-Friendly Destination for Tourists

While Argentines are enjoying their peso’s new strength, foreign visitors to Buenos Aires are feeling the pinch.

• Just a year ago, Buenos Aires was one of the cheapest destinations in Latin America. Today, it is one of the most expensive.
• Prices at bars and restaurants now rival those in Western Europe and North America.
• One digital nomad in a Buenos Aires co-working space recently complained on FaceTime: “A pizza is $20! That’s more than in Canada!”

Argentines, however, are unsympathetic, pointing out that the previous period of cheap prices was due to a severely devalued currency and economic mismanagement.

6. Peso-Based Transactions and Investments Are Increasing

Another major indicator of the peso’s strength is the growing use of the currency in financial transactions.

• A government tax amnesty program led to $15 billion in deposits, boosting the banking system’s ability to offer peso-denominated loans.
• Businesses are increasingly allowed to list prices in both pesos and dollars, reflecting a shift towards a more stable currency environment.
• Newly issued 10,000 and 20,000-peso banknotes have made handling cash easier, replacing older bills that had become nearly worthless due to past inflation.

Will the Peso’s Strength Last?

Despite these promising signs, uncertainty looms over how long the peso can maintain its gains.

• President Milei has pledged to lift currency and capital controls later this year, which could unleash pent-up demand for U.S. dollars and trigger a new depreciation cycle.
• The government has allowed businesses to start pricing in dollars, signaling a potential shift toward dollarization in the future.
• Long-term stability depends on whether Argentina can continue reducing inflation and demonstrate consistent economic policies.

For now, the peso is stronger than it has been in years, and Argentines are adjusting to the new reality—one where their currency, at least temporarily, holds its ground.

The Argentine peso’s 40% appreciation in 2024 marks a dramatic reversal from its history of freefalling value. Backed by austerity measures, currency controls, and declining inflation, the peso has gained strength in ways not seen in over a decade.

While questions remain about its long-term sustainability, six clear signs confirm the Peso’s recovery. Whether this trend continues or reverses will depend on Milei’s next economic moves—but for now, the peso is proving its resilience.

Subscribe to Notifications