Three major Wall Street banks celebrated Milei's government's measures

While the official dollar is trading at $1,190 in the local market, three major financial entities on Wall Street enthusiastically highlighted the agreement reached with the IMF and the lifting of the currency controls by the Government of Javier Milei. According to them, the new exchange rate scheme will contribute to strengthening reserves, boosting economic growth, and attracting investments. 

Starting this Monday, Milei's Government implemented a floating system within bands, where the official dollar will move between $1,000 and $1,400, with a monthly update of 1% for both ends. This set of measures also included the removal of currency restrictions for individuals, along with an opening for business operations.

JP Morgan stated in a report that last Friday's announcements "not only respected the principle of prioritizing the economy over politics but also exceeded our optimistic expectations regarding the country's essential macro-financial evolution. Essentially, the policy advances represent a significant step that allows the country to unlock potential that has been repressed for decades by poor political decisions."

Meanwhile, Morgan Stanley's report shared a favorable outlook on the new macroeconomic framework. They believe it will allow for the accumulation of international reserves and support more robust growth.

Regarding the liberalization of controls on currency flows, they stated that this measure favors the arrival of foreign direct investments and economic development. Additionally, they highlighted that the structural reforms necessary to consolidate sustained growth are correctly planned and will be addressed after the midterm elections.

Thanks to disbursements from the IMF, the IDB, and the World Bank, they estimate that the Central Bank has an initial intervention capacity of around 20 billion dollars, which represents sufficient support to implement a managed floating regime that provides greater predictability.

The analysis also indicated that, according to the IMF's criteria, the current net reserves of the BCRA are around USD -6.4 billion, and they should reach USD -500 million by the end of June 2025. "We consider the improvement of approximately USD 6 billion this quarter viable, given the new exchange rate regime combined with the lifting of the 'blend exchange policy' and temporary fiscal incentives for exports, which will likely boost grain sales at the peak of the harvest," they explained.

Thus, an additional increase of 4.5 billion dollars is projected in the last quarter of 2025, which would imply a total rise of around 10 billion in net reserves during the remainder of the year.

In their final analysis, the experts noted: "We expect interest rates to rise over time due to exchange rate volatility. We will also be alert to the visit of the U.S. Treasury Secretary early this week: will that visit bring any tariff relief or additional foreign currency financing? We consider both likely."

Meanwhile, BNP Paribas evaluated that "the Government took a step in the right direction by announcing a more ambitious change in its exchange rate policy than the market expected. Although the country remains exposed to high global uncertainty and the economic plan is not without risks, the new policy scheme is more solid than the previous one, and also compared to the alternatives considered by most analysts."