Latest News

Argentine Treasury burns dollars to defend the peso, as US aid talks loom

The Argentine Treasury is quickly depleting its dollars reserves to defend the Peso. This has strained financial markets Wednesday, as funds from an agricultural exporters' special agreement are running low just weeks before midterm election.

According to traders, the Treasury (under the Economy Ministry) has sold about $2 billion over the past few sessions in order to stabilize the peso. The ministry doesn't report publicly its market activities.

The Treasury's holdings of hard currency have been rapidly depleted by the interventions. Portfolio Personal Inversiones reported that dollar deposits at the central banks have fallen from $1.44 billion on Friday to only $680 million. This means the intervention capacity is limited to "a few days" at this pace.

According to Wise Capital, the Treasury has sold over three quarters of the hard currencies it raised through the export scheme.

The government announced that it would be implementing a new plan for the end of last month.

Export taxes suspended

On grains and their products. In just a few short days, traders had committed to sell $7 billion of crops to China, mostly soybeans. The deal brought in a lot of cash, but it has also fueled tensions between Washington and Beijing, since U.S. Farmers are locked out of the Chinese Market due to a tariff dispute.

Pressure is increasing ahead of Argentina’s legislative elections, which will take place on October 26. The libertarian president Javier Milei’s administration will be put to the test.

Luis Caputo, the Economy Minister in Washington, is negotiating with a potential agreement to calm the markets.

Currency swap of $20 billion

deal. Deal.

Kristalina Georgieva, Managing Director of the IMF

The fund works closely with the U.S.A., World Bank and Inter-American Development Bank in order to develop an assistance package for Argentina.

The wholesale peso remained at 1,430 dollars per peso on Wednesday. However, the parallel rate for sending money abroad rose to 1,556 dollars per greenback. This increased the gap in exchange rates to almost 9%.

Most economists agree that the current strategy of intervention is only a temporary solution until the elections. After the elections, a new and more liberal foreign exchange regime is expected, but its implementation will depend on the results of those elections and whether or not they are backed financially by the United States.

On asset markets, the average price of sovereign bonds fell by 1%. The S&P Merval index, on the other hand, reversed its early losses and closed up 1.42 percent.

Aluar shares jumped by 2.93% following the announcement of the government.

Temporarily suspended

Tariffs on metal exports. Walter Bianchi, Buenos Aires. Additional reporting by Rodrigo Campos, New York. Editing by Margueritachoy and David Gregorio.

(source: Reuters)