Economy Minister Luis Caputo told investors in New York that Argentina plans to buy back sovereign bonds and start accumulating foreign reserves even while the peso trades within its band, according to people with direct knowledge of the matter.
During a meeting with about 40 investors hosted by JPMorgan Chase & Co. on Friday, Caputo said President Javier Milei doesn’t intend to float Argentina’s currency, but will keep it trading within established bands, according to the people, who asked not to be identified discussing a private gathering.
However, Caputo said he could consider speeding up the pace of band adjustments to 1.5 percent a month, depending on inflation and peso demand, two of the people said. Currently, the upper and lower limits of the trading range are adjusted by one percent a month, allowing the peso to gradually weaken.
Caputo expects to unveil the full plan – including a timeline for reserve accumulation, the debt buyback and a debt-for-education bond – within 30 days, one of the people said, referring to his remarks.
Press offices for JPMorgan and Argentina’s Economy Ministry didn’t respond to requests for comment after business hours Friday.
Since Milei’s party emerged victorious in Argentina’s midterm elections two weeks ago, many investors have argued this is the time for the president to reset his policy framework. Pacific Investment Management Co. urged the libertarian to allow the peso to float freely.
While Argentine officials have denied any intention to change the currency regime, Caputo signalled he would alter rules to allow the government to buy dollars when the peso is trading within the band and market liquidity is strong.
Caputo didn’t specify when dollar purchases would begin but said he expects the currency to keep appreciating as peso demand grows, according to the people.
Since Argentina signed a US$20-billion deal with the International Monetary Fund in April, the Central Bank struggled to build foreign reserves as planned. Instead, it has been forced to sell dollars to prop up the peso amid pre-election volatility.
Argentina plans to buy back global bonds due in 2029 and 2030 using a cheaper source of funding, Caputo said in the meeting. He added that Argentine officials have signed a non-disclosure agreement with the United States which prohibits him from sharing any specifics.
Earlier Friday, Caputo and Milei also spoke at a closed-door event hosted by the Americas Society/Council of the Americas.
by Manuela Tobias, Bloomberg
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