Argentina stops banks from hoarding dollars ahead of devaluation
Central Bank limits amount of foreign currency the nation’s commercial lenders can hold, in a push to discourage US dollar hoarding ahead of an expected devaluation by president-elect Javier Milei.
Argentina’s Central Bank limited the amount of foreign currency the nation’s commercial lenders can hold, in a push to discourage US dollar hoarding ahead of an expected devaluation by president-elect Javier Milei after his Sunday inauguration.
The country’s Central Bank said that holdings may not be greater than the lowest amount recorded between October 12 and December 6, according to a rule published on its website Thursday. The measure — announced on the last business day of the current administration — goes into effect immediately and is valid until the end of the year.
The new rule would force banks to unwind dollars they currently hold in their portfolio, according to people familiar with the matter, who asked not to be named discussing private information. That would increase the supply in the official exchange market and help the Central Bank to support the peso just as traders brace for a devaluation. Market pricing points to a 27 percent drop in the peso on Monday, and investors see a 44 percent devaluation going forward under Milei.
Spokespeople for the Central Bank said the measure is aimed at keeping banks from increasing dollar holdings today. Milei’s team declined to comment.
While the incoming president’s team has signalled it won’t lift currency controls right away and seemingly delayed plans to scrap the peso altogether, the current level of the Argentine currency is largely seen as unsustainable.
related news
-
Industrial output, construction plunge amid recession
-
City monthly inflation rate drops to single-digit in boost for government
-
Government gears up for ‘omnibus’ Senate showdown
-
Power producers seek better terms for US$2-billion Argentina debt
-
Goldman, Stone Harbor wind back Argentina bets after bond rally
-
Milei government hikes taxes on dividends going abroad
-
10,000-peso banknote enters into circulation
-
Protesters march on presidential residence to demand food aid
-
Crime deterring return of South American footballers
-
Milei to business community: Argentina can be ‘new Mecca of the West’