Updated Financial Content

Key Factors of the Inflationary Scenario

The projected deceleration is based on three pillars: sustained fiscal adjustment with 2.3% primary surplus of GDP, contractionary monetary policy with positive real interest rates for the first time in 4 years, and IMF agreement limiting monetary issuance. However, risks persist: wage pressure in election year, inflationary inertia rooted in expectations, and exchange rate vulnerability to external shocks.

Impact on Your Wallet

95% annual inflation means today's $100,000 pesos will be worth $51,280 in one year. Food and beverages, representing 32% of average family spending, project 102% increases due to drought and rising logistics costs. Public utilities will rise 87% on average after gradual subsidy elimination. Private education will increase 93% aligning with general inflation. Prepaid healthcare will grow 89% according to government authorizations.

Recommended Protection Strategies

Increase your savings rate from 15% to 22% to compensate for accelerated erosion. Diversify in adjustable assets: 35% in CER instruments, 30% in dollarization, 25% in Money Market funds, 10% in alternative assets. Review your budget monthly adjusting for real inflation of your specific basket. Negotiate quarterly salary increases if your employment situation allows. Consider complementary income sources to maintain purchasing power.

Opportunities in the Scenario

Inflationary deceleration, though gradual, opens opportunity windows. CER bonds with 2027-2028 maturities offer protection plus additional 3-5% real return. Exporting company stocks benefit from competitive exchange rate. Dollar properties show prices 23% below historical average. Technology company Cedears offer geographic diversification with dollar returns.

2026 Exchange Rate Outlook

The government maintains a 2% monthly crawling peg for the official dollar, projecting an exchange rate of $1,275 for December 2026. However, this trajectory faces challenges: negative net reserves at $6,800 million, dollar debt maturities of $4,200 million in the first half, and IMF pressure for exchange rate unification. The market expects a 15-20% exchange rate correction in the second quarter.

Dollarization: How Much and How

The question isn't whether to dollarize but what percentage of your wealth. For conservative profiles: 40-50% in dollars protects against abrupt devaluation while maintaining peso flexibility for daily expenses. Moderate profiles: 30-40% balancing exchange rate protection with opportunities in adjustable peso assets. Aggressive profiles: 20-30% complementing with more sophisticated peso instruments that can outperform the dollar.

Alternatives to Traditional Dollarization

Physical dollar bills: maximum security but no yield and theft risk. Bank account dollars: immediate liquidity but zero yield and restriction risk. MEP Dollar: legal access to financial dollar operating bonds, 2-3% spread from official. Stablecoins (USDC/DAI): 4-8% annual yields, 24/7 access, but requires responsible digital custody. Cedears: indirect dollar exposure investing in foreign companies, with additional appreciation potential.

Purchase Timing

Trying to guess the dollar floor is speculation, not strategy. Implement dollar cost averaging: buy a fixed monthly amount (e.g., $75,000 pesos) regardless of price. In 12 months you'll have averaged the exchange rate eliminating timing anxiety. If you have a significant sum, split into 6 bimonthly purchases. This discipline outperforms 87% of timing attempts according to investor behavior studies.

Conservative Category (Low Risk)

UVA Fixed Terms: Projected return: -2% real annually. Adjust for inflation but pay only 1% additional, falling below real inflation. Advantage: simplicity and SEDESA coverage up to $15 million. Disadvantage: capital immobilization for minimum term. Recommended for: future peso obligations with defined date.

Money Market Funds: Projected return: -1.5% real annually. Yield 90-95% of inflation with 24-hour liquidity. Advantage: total flexibility and professional management. Disadvantage: don't beat inflation. Recommended for: emergency fund and immediate liquidity.

Moderate Category (Medium Risk)

Short CER Bonds (TX26, T2V4): Projected return: +2% to +4% real annually. Adjust for inflation plus pay additional rate. Advantage: inflationary protection with additional profitability. Disadvantage: secondary market volatility. Recommended for: 12-24 month horizons with fluctuation tolerance.

MEP Dollar + USA Account: Projected return: +5% to +8% annually in dollars. Protection against devaluation plus dollar yield. Advantage: geographic diversification. Disadvantage: requires USA account and technical knowledge. Recommended for: amounts exceeding $3 million pesos.

Aggressive Category (High Risk)

Argentine Stocks (Merval): Projected return: +15% to +25% real annually. Significant growth potential. Advantage: superior returns in positive scenarios. Disadvantage: extreme volatility, can drop 30% in weeks. Recommended for: speculative portion maximum 15% of portfolio.

Technology Cedears: Projected return: +12% to +20% annually in dollars. Exposure to global leading companies. Advantage: combines dollar protection with business growth. Disadvantage: correlation with international markets. Recommended for: international diversification with 3+ year vision.

Balanced Model Portfolio

For a moderate investor with $1,000,000 pesos: 25% in Money Market funds ($250k) for liquidity, 30% in CER Bonds ($300k) for protection and return, 25% in MEP Dollar ($250k) for devaluation hedge, 15% in Cedears ($150k) for growth, 5% in cash ($50k) for opportunities. Rebalance quarterly maintaining target proportions.

Deductions Many Ignore

Income Tax: Deduct pension contributions, social security, prepaid healthcare (up to $142,000 annually), mutual fees, life insurance, uncovered medical expenses, mortgage loan interest, donations to registered NGOs, rent paid (up to $346,000 annually). These deductions can reduce your taxable base by 23% on average.

Personal Assets: Legal Minimization

Single home exemption up to $350 million. Vehicles over 5 years old exempt. Investments in Argentine stocks and bonds exempt up to $27 million. Structure your wealth prioritizing exempt assets: if you have $500 million, better $350M in single home + $150M in Argentine stocks than $500M in rental apartments.

Monotributo vs Registered Taxpayer

If you invoice less than $68,000,000 annually (category K) and meet requirements, monotributo is more convenient: fixed monthly charge of $253,000 vs 21% VAT + 35% Income Tax. However, monotributo doesn't allow expense deductions or A invoices. Analyze your specific situation: if your deductible expenses exceed 40% of billing, Registered Taxpayer may be more convenient.

Succession Planning

Inheritance tax in Argentina: 0% for direct descendants on first $350 million, then progressive rates up to 21.5%. Strategies: lifetime donation with usufruct reserve (pays less than inheritance), testamentary trusts, life insurance (doesn't pay succession tax), stock/bond investments (valuation at time of death may be lower).

2026 Capital Whitening

If you have undeclared assets, the whitening valid until June 2026 offers: reduced 5% rate for amounts up to USD 100,000, 10% between USD 100k-500k, 15% over USD 500k. Additional benefit: Personal Assets exemption for 3 years on whitened assets. Evaluate cost-benefit: whitening USD 50,000 costs USD 2,500 but regularizes you and avoids future penalties that can reach 400% of evaded amount plus imprisonment.