While Argentina Frees Up Dollar Use, Brazil Imposes Heavy Taxes. If I Were Money, I'd Say 'Hola' Instead of 'Olá'

Almost in sync: one day, Argentina introduces rules for the broad regularization of dollars kept "under the mattress"; the next, Brazil increases the IOF, a tax that also applies to the purchase and sale of U.S. currency. The redirection of currencies in the Southern Cone becomes inevitable. On one side, a country that penalizes those who operate with it; on the other, one that encourages. Although the proportions may vary, various route changes will occur in a perfectly predictable manner. Brazil's skill in intimidating through the tax path contrasts with Argentina's new culture of fiscal relief in combined routes. Thus, two worldviews are revealed: in one, money belongs to the individual; in the other, it belongs to the State and is used according to its rules and moral values.

I am Ricardo Gurgel, a civil engineer, and I would like to share some insights that come to me with crystal clarity, and which I am surprised are not perceived by more people, especially those dealing with market dynamics. Even recognizing that neither the Brazilian nor the Argentine market is among the global giants, both represent gateways to opportunities and risks that vary in intensity and quality over time.

1. Argentina: Incentive to Formalize 'Under-the-Mattress' Dollars

The measure announced by the Argentine government, the so-called "blanqueo", aims to regularize dollars that are outside the formal banking system, popularly known as "under-the-mattress" dollars. By allowing these funds to be brought to light with reduced rates or tax incentives, the government:

• Stimulates banking and circulation of idle capital.

• Strengthens reserves and internal liquidity without resorting to external loans.

• Creates an environment of tax predictability and confidence in the system.

2. Brazil: Increase in IOF on Foreign Exchange Operations

Meanwhile, Brazil announces an increase in the IOF (Tax on Financial Operations) that also applies to transactions with foreign currencies. This means:

• Higher cost to legally buy or sell dollars.

• Disincentive to formal exchange operations.

• Potential stimulus to informality or the search for alternative channels, including through neighboring countries.

Regional Currency Redirection

The combined effect of these measures tends to generate a redirection of currencies within the Southern Cone:

• Investors, companies, and even tourists may prefer to operate with dollars in Argentina, where there is an incentive to formalization and lower tax burden.

• Brazil, by taxing legal transactions, risks losing part of the formal exchange flows and encouraging informal routes or operations abroad (including on Argentine soil).

Two Opposing Economic Visions

The decisions reveal a clash of economic philosophies:

• Argentina points to a logic of tax relief and reintegration of private capital into the formal system.

• Brazil, on the other hand, reaffirms a revenue-collecting logic in the name of state control, even at the cost of discouraging formality.

This mismatch can alter the regional currency and financial balance, and Brazil, by overtaxing, may be inadvertently exporting dollar flows to its neighbors.

Recent Context Favorable to the Appreciation of Argentine Assets

1. Pro-Market Signaling and Structural Reforms

• The "blanqueo" (regularization of under-the-mattress dollars) signals an attempt by the Milei government to attract idle capital and reduce informality, which tends to increase liquidity and boost financial and banking sectors.

• Fiscal reforms and deregulations, even if controversial, show political will to restructure the economy with a focus on efficiency and liberalization.

2. Stimulus to Capital Formalization

• The entry of informally held dollars into the Argentine banking system can strengthen reserves, confidence in the system, and performance of listed companies.

• This tends to favor sectors such as banks, consumption, and energy, which have significant weight in the ARGT.

My Personal and Non-Suggestive Bet on the ARGT / ARGT39 ETF

Sector Composition (may vary over time, but tends to include):

• Globant, Mercado Libre, YPF, Grupo Financiero Galicia, among other major Argentine companies.

• Companies with international exposure (such as Mercado Libre and Globant) mitigate local risk and increase growth potential in recovery scenarios.

Risk/Return Ratio:

• The ARGT has had moments of strong growth in positive cycles, but it is a more volatile ETF, ideal for those who accept a bit more risk in exchange for