Dollar on the rise, but without inflation: Federico Furiase's plan to keep the economy on track

Central Bank Director Federico Furiase challenged alarmist analyses of the exchange rate and explained why the dollar 's rise isn't generating an inflationary spiral. As he explained in an interview with Radio Rivadavia , the key lies in a combination of a fiscal surplus , a halt to monetary issuance , and an orderly macroeconomic framework that generates predictability.

“ The dollar floats, but the solid macroeconomic environment prevents it from being passed on to prices ,” Furiase stated, referring to the current exchange rate regime. The official explained that the current system allows the currency to move within established bands, which prevents sudden jumps: “ The dollar floats between bands that adjust by 1% monthly, with a floor that started at $1,000 .”

One of the factors that drove the movement in recent weeks was the early purchase of dollars by companies and savers in a context of political uncertainty , as well as the accumulation of reserves by the Treasury. " The Treasury purchased $1.5 billion , in a context where expectations continue to improve," he emphasized.

For Furiase, the real novelty is the change in the logic of economic behavior: "There is no longer monetary validation. That's why the rise of the dollar doesn't translate into higher prices," he explained. He also asserted that many sectors today think twice before making a point: " Raising prices just in case can put you out of the market ."

In this regard, the official welcomed the existence of a new " change of perspective " among economic actors: "Today, we have a well-capitalized Central Bank, a fiscal surplus, and no issuance. This foundation prevents overflows."

Furiase also referred to the recent agreement with the International Monetary Fund , which relaxed the reserve accumulation targets by $5 billion . This adjustment allows for better alignment of commitments with the functioning of the local economy. " Inflation and expectations are falling, and the economy is growing at 5% or 6% ," he emphasized.

Since the current administration took office, the Central Bank has purchased more than $25 billion , although a large portion was used to pay off debt in cash. Still, he emphasized: "Most of these reserves were used to cover inherited maturities, but they did allow us to strengthen the BCRA's balance sheet."

Regarding the role of interest rates, Furiase clarified that they are not rigidly set by the Central Bank, but rather are market-driven: "They are endogenous and reflect the balance between savings and investment." Despite this, the agency closely monitors liquidity: " We are removing pesos from the market to avoid any inflationary pressure ."

The progressive dismantling of instruments like the Leliqs and the political context also impacted the recent rate hike. But for Furiase, the key remains control over the monetary base .

The BCRA director also focused on the social aspect of the economic program. He stated that, with this scheme, "some 12 million Argentines have been lifted out of poverty" in the last 18 months. " Registered private wages and pensions have grown 15 percentage points since December," he added.

He also highlighted the expansion of credit: "We went from 3.5 to 9 points of GDP in financing to the private sector," and the tax rebate: " The PAIS tax was lowered and withholdings were eliminated in several sectors. That's money that goes back into people's pockets ."

Furiase closed with an implicit warning: "The system is stable, but it depends on maintaining this solid macroeconomic framework." While acknowledging that tariffs and structural reforms are still pending, he maintains that the path is clear.

The question is whether the model will withstand the test of time and political tensions. For now, the dollar is floating , but the economy isn't collapsing . And that, in Argentina, is saying something.