“Malbec dollar” won’t save Argentina from devaluation

A preferential rate to facilitate wine exports is the latest addition to Argentina’s myriad exchange rates, but it doesn’t address the fundamental problem that the peso is overvalued. We estimate that the currency needs to fall by around 30% to restore competitiveness. The government will do everything it can to avoid devaluation ahead of this year’s election, but kicking the can down the road merely raises the threat of a more destabilising correction in the peso further down the line.