(Bloomberg) -- Investors are betting Argentina’s central bank will accelerate the gradual depreciation of the peso, known as a crawling peg, by April in an effort to make the currency more competitive in time for the country’s crucial commodity exports. 

Investors see the peg accelerating to 6% monthly by the start of the second quarter, according to peso futures data. That’s up from the 2%-per-month pace set by President Javier Milei when he took office in December and also enacted a 54% devaluation. Milei’s currency policy is a crucial pillar of his bid to rein in Argentina’s triple-digit inflation as well as the government’s $44 billion program with the International Monetary Fund. 

Monthly inflation rates of over 20% in December and January have diminished the competitiveness gained by the peso after the large December devaluation and 2% monthly depreciations. That mismatch between the peg and monthly inflation has fueled investor speculation that another one-time devaluation would be necessary as the government seeks to balance keeping the currency competitive for exports on the one hand while limiting the pass through to prices on the other.

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The new forecast for a 6% crawling peg by April is three times the current rate but is still less than the 10% pace investors had expected in December. The peg’s pace will depend on the central bank and how fast inflation decelerates, Economy Minister Luis Caputo said Monday in a TV interview.

Investors expect the government will ramp up the crawling peg in time for Argentina’s essential crop harvest season when farmers begin to exports billions of dollars in soy, corn and wheat products, the economy’s main source of hard currency. An outdated peg could encourage exporters to hold back on shipping their harvests until the peso hits a weaker and more realistic level.

“They are going to have to accelerate the crawling peg after March because the real exchange rate is appreciating by leaps and bounds,” said Fernando Losada, a managing director at Oppenheimer. “If the exchange rate falls too far behind, we will go back to the old story of soybeans piling up in silo bags.”

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