Argentina Permits Oil Sector to Access Enhanced Exchange Rate as Election Approaches

By Walter Bianchi and Eliana Raszewski

BUENOS AIRES – Argentina’s economy minister announced on Tuesday that the country will permit its oil sector to access a significantly more favorable exchange rate for the next two months. This initiative aims to stimulate the industry amid a deep economic downturn and in anticipation of the crucial presidential election next month.

Economy Minister Sergio Massa revealed this decision alongside leaders from the state-owned oil company YPF, as he campaigns to replace outgoing President Alberto Fernandez as the candidate for the ruling Peronist coalition in the upcoming election on October 22.

With inflation exceeding 124%, Argentina maintains strict control over its official exchange rate, but it allows various sectors to access preferential rates within a complex system of currency controls. Critics argue that this system distorts economic choices and encourages many to abandon the local currency, which has lost more than half of its value in the black market this year.

Massa’s plan includes allowing firms to exchange 25% of the value of their oil and gas exports at an alternative exchange rate to convert their dollars into pesos. This CCL rate grants the oil sector approximately 763 pesos for each U.S. dollar, more than double the official rate of around 350 pesos per dollar. In the informal parallel market, sellers currently receive about 758 pesos per dollar.

"We decided to recognize 25% of what energy companies export and bring to Argentina to invest using the CCL value, encouraging increased investment levels in the oil and gas sector over the next 60 days," said Massa at an event in Neuquen province, which is home to the significant Vaca Muerta shale formation.

In recent primary elections, radical libertarian candidate Javier Milei secured the top spot, with Massa and center-right contender Patricia Bullrich trailing closely behind.