A British bank warned that Argentina's exchange rate system is under pressure and warned of debt maturities and low reserves.

British investment bank Barclays released a report in which it considered that the "muddle-through" strategy—holding the currency unchanged—is no longer viable for Argentina. According to the analysis, the exchange rate band system is facing growing tensions due to high debt maturities, limited reserves, and a lack of external financing.

"The strategy now appears more difficult. When Javier Milei's political prospects were more solid, the government could still hope to continue without market access until inflation normalized. Today, this path has a very low probability," the bank noted in a report sent to clients.

The warning adds to growing investor doubts about the government's ability to sustain the current regime until after the October elections, amid strong demand for foreign currency and financial tensions.

The report details that between now and the end of Milei's term, commitments totaling USD 44 billion are due. If we assume renewal with multilateral organizations (except the IMF), the figure drops to USD 33 billion: USD 2 billion in 2025, USD 12 billion in 2026, and USD 19 billion in 2027.

Barclays emphasized that foreign exchange liquidity is very limited. Under the strictest metric, which excludes banks' dollar deposits at the Central Bank of Argentina (BCRA), available reserves are barely USD 14 billion. Even including gold and yuan, the margin is insufficient to address adverse scenarios.

The bank projects that, even with foreign currency purchases, net reserves could end at USD -13 billion by the end of the term, a level similar to that inherited from Kirchnerism in 2023, when the economy was virtually bankrupt.

For Barclays, the government is not planning macroeconomic changes before the October 26 legislative elections, prioritizing exchange rate stability as an electoral condition. This decision, it warns, will lead to a drop in reserves over the next six weeks . This will create even more challenging initial conditions for the second half of the term.

In this scenario, the entity believes Milei will have incentives to implement a "convincing macroeconomic shift," capable of restoring credibility and reducing the risk of a currency crisis. "We believe that such a regime would be achievable at contained costs," it noted.

The analysis exposes the contradictions of the political opposition, which during the Kirchner years failed to question the issuance, the deficit, or the restrictions that ultimately destroyed the Central Bank's balance sheet . Today, these same sectors present themselves as defenders of stability, while demanding quick solutions to a legacy they themselves consolidated.

Barclays also assessed the need for a depreciation of the real exchange rate. According to the bank, a new ceiling of up to 40% above current levels would be "credible," without triggering a sharp jump in inflation.

The institution relied on historical benchmarks: in 2010, the real exchange rate was 30% lower with strong growth and a lower external deficit . Meanwhile, between 2018 and 2019, it was 20% weaker, amid a loss of market access.

The key, according to the analysis, is that fiscal discipline and contained inflation would allow for the absorption of an exchange rate adjustment without the pass-through effects that marked other episodes such as 2013, 2015, or 2023.