Bank of America is maintaining a neutral view on Argentina's currency, forecasting the peso will reach 1,700 per US dollar by the end of 2026 and 1,900 by the end of 2027.
In its outlook, the bank projects Argentina's economy to expand by 3.5% in 2026 and by a further 3.5% in 2027. The 2026 growth estimate is in line with consensus forecasts, while the 2027 projection exceeds consensus by 40 basis points.
On inflation, Bank of America expects consumer prices to rise 25.5% in 2026 - a figure 50 basis points below consensus - and to moderate to 13.3% in 2027, which is 270 basis points below consensus expectations.
Economic backdrop and recent developments
The bank notes that economic activity has been slower to rebound, in part because persistently high interest rates during the election period weighed on recovery. Unemployment rose to 7.5% in the fourth quarter of 2025, while tax receipts contracted.
Since then, interest rates - particularly on peso-denominated instruments - have fallen, and the Central Bank of Argentina (BCRA) has been active in the foreign-exchange market, purchasing US dollars. The BCRA has accumulated roughly $3.6 billion so far this year and the bank expects at least $10 billion in purchases in 2026, reflecting anticipated increases in money demand from currently low levels.
Inflation trajectory and drivers
Inflation showed signs of stickiness early in the year, with month-over-month readings of 2.9% in January and February compared with an average monthly pace of 2.3% last year. Bank of America attributes part of the upward pressure to an oil price shock.
Higher oil prices are a mixed factor for Argentina: they bolster the country's external accounts because Argentina is a net oil exporter, but they also introduce downside risks to growth forecasts by pushing inflation higher.
Sectors expected to lead recovery and policy moves
Bank of America expects mining, energy, banking and information technology sectors to be the primary engines of the economic recovery. Separately, Argentina's government has delayed a return to global bond markets, stating that yields remain too high relative to fundamentals.
Congress approved a labor reform intended to make the labor market more dynamic by lowering hiring and severance costs, reducing labor litigation, simplifying collective bargaining and encouraging formal employment.
Valuation and hedging guidance
Using its models, Bank of America finds the peso modestly overvalued. The bank's medium-term Compass BEER model suggests an overvaluation of 4.7%, while its long-term Compass FX model indicates an overvaluation of 8.3%.
Given its assessment, the bank does not recommend hedging peso exposure.
Bottom line
Bank of America's forecasts combine a neutral FX stance with above-consensus growth for 2027, lower-than-consensus inflation expectations for both 2026 and 2027, active central-bank dollar purchases and a view that the peso is modestly overvalued according to its models. The outlook highlights sectoral contributors to recovery and notes both the benefits to external accounts from higher oil prices and the attendant risks to inflation and growth.