Argentines put US$2.3 billion into banks, signalling faith in Milei

Argentines have deposited more than US$2.3 billion into dollar-denominated local bank accounts since President Javier Milei took office December 10, reflecting incipient optimism about his government. 

The nearly 17 percent jump to US$16.4 billion means dollar deposits in Milei’s first three months have completely recovered from their losses over the past year, according to Central Bank data. 

The greenbacks Argentines keep in the financial system are an informal barometer of political risk as citizens tend to withdraw money during periods of volatility and deposit savings in more stable times. 

If the trend continues, it would be good news for Argentina’s Central Bank, where a portion of savers’ dollar deposits count toward the foreign reserves needed to stabilise the peso. 

To be sure, dollar savings tend to pick up at the end of the year in Argentina for tax reasons, so some seasonal forces helped drive the uptick in December. More broadly, deposits have a long run ahead after tanking in 2019 from a peak of about US$32.5 billion after Milei’s predecessor, Alberto Fernández, won a primary election that year. 

The surprise result sparked panic about the return of a Peronist government and heralded the end of former president Mauricio Macri’s market-friendly administration. 

In Argentina, checking accounts are denominated in pesos while savings accounts can be denominated in dollars. However, citizens are legally limited to exchanging US$200 in pesos per month and must pay heavy taxes on the transaction, one of the country’s many currency controls due to a lack of dollars in the Central Bank.