POLL-Argentine peso to keep trading within target band, approaching upper limit by Oct. vote

By Gabriel Burin

BUENOS AIRES, May 6 (Reuters) - Argentina's peso will continue trading within a government-set band in coming months, probably approaching the upper limit around October's mid-term election, a Reuters poll found.

Last month, the currency's official exchange rate ARS=RASL depreciated 10% after the elimination of capital controls, a step required under a new $20 billion International Monetary Fund loan program.

Since then, it has remained close to 1,200 per U.S. dollar, the mid-point of the new moving range. The official rate has also converged with the parallel market value ARSB= where the peso had already been oscillating between 1,000 and 1,400 since early 2024.

The currency is set to trade at 1,297 per dollar by October 31 compared to 1,204 on Monday, according to the median estimate of 21 foreign exchange strategists polled between April 30 and May 6.

This would imply a 7.2% loss in the period encompassing the run-up and immediate aftermath of a legislative election, where popular support for President Javier Milei's reforms will be put to the test.

"In the short term, the exchange rate will trend toward the lower band due to the start of the seasonal peak of the grain harvest," said Isaias Marini, an economist at Consultatio.

"In the third quarter, (dollar) supply will tighten and the run-up to the elections could lead to increased demand from individuals ... in the second half of the year, the FX rate should move toward the upper band."

The government has said it expects the peso to float to the lower end of the band due to a structural stabilization of Argentina's economy, rather than just as a result of near-term flows from agricultural proceeds, but with possible spurts of volatility.

The country last week recorded its largest single-day sales volumes for soybeans so far in 2025 as oilseed transactions picked up after hitting their slowest pace in over a decade.

In one year, the peso is seen at 1,400 per dollar, shedding 14% but still within the band and averaging a relatively low 1.2% monthly depreciation rate, consistent with growing market consensus of further disinflation ahead.

Meanwhile, the Brazilian real BRBY, BRL= is set to drop 3.6% in 12 months to 5.90 per dollar from 5.69 on Monday. In Mexico, the peso is forecast to lose 4.9% to 20.70 per dollar from 19.69 in the same period.

So far in 2025, the Argentine peso is down 14.4%, Brazil's currency is up 8.6% and the Mexican peso has gained 5.7%.

(Other stories from the May Reuters foreign exchange poll)