A temporary surge in farm-export dollars has prompted Argentines to purchase cheap greenbacks, draining the very reserves President Javier Milei’s government is trying to rebuild.
The farm sector has sold nearly US$6 billion in dollar holdings since the government temporarily scrapped grain export taxes this month. Exporters had to liquidate almost all of a set quota within days to qualify for the tax exemption, which expired last week. Yet the Treasury bought just US$2.2 billion, less than 40 percent of the total, according to official data.
Local bank executives found that, instead, large amounts were gobbled up by Argentines who access the official FX market and flip them using parallel exchanges, according to people with direct knowledge of the matter. By the government’s own estimates, the trade – which involves buying US currency at roughly 1,380 pesos per dollar and reselling it at almost 1,500 pesos per dollar – has depleted as much as US$2 billion a month, according to a report by brokerage One618.
Called “rulito,” the trade is a “kind of round-trip currency arbitrage,” said Ramiro Marra, director at Bull Market Brokers and a former adviser to Milei.
To block the flows, Milei’s government reintroduced some currency restrictions. The most important, unveiled on Friday, is a “cross restriction” banning people from reselling dollars for 90 days. The Central Bank also increased sales of futures contracts to limit further depreciation in the peso. “We shut down a kiosk of about 20 people,” Economy Minister Luis Caputo told TN television on Friday.
However, official data suggests that the measures haven’t diminished Argentines’ appetite for dollars — at least not at current prices. Central Bank officials reminded operators of digital wallets on Tuesday that they’re not allowed to sell dollars at the official exchange rate, with authorities suspecting customers used the platforms for “rulito” trades using crypto assets and the unofficial market, according to a person with direct knowledge.
“These transactions are limited to banks and exchange houses authorised by the Central Bank,” Central Bank Governor Santiago Bausili told A24 television. “Digital wallets and brokerage firms are not regulated by the Central Bank.”
As so often in Argentina, the government restrictions had unintended consequences, widening the gap between official and parallel exchange rates. The measures don’t fully prevent arbitrage in the informal market, as the Argentine government asked banks to stop monitoring transactions.
The peso has suffered its steepest drop in three weeks since Monday, with the parallel rate weakening beyond 1,500 pesos per dollar and the spread blowing past 10 percent. Traders expect more weakness, with implied rates on currency futures contracts indicating further depreciation ahead. Those expectations run above 70 percent a year through November, despite recent interventions from the central bank. In comparison, investors expect inflation of less than 30 percent for the coming 12 months.
The government’s inability to tap more dollars has been worrying bondholders, with more than US$500 million in debt coming due in November. However, some of those concerns eased after US Treasury Secretary Scott Bessent announced financial aid would be coming to the South American nation without providing specifics on timing. Argentine dollar bonds were falling across the curve for a fifth straight session on Wednesday, with notes maturing in 2035 losing almost two cents to trade around 50 cents on the dollar, according to indicative pricing data compiled by Bloomberg.
“It’s clear that, even with this measure, the Treasury would fall short of covering principal and interest payments on Bonares and global bonds due in January 2026,” Juan Manuel Truffa, an economist at local consultancy Outlier, wrote in a note to clients.
by Ignacio Olivera Doll, Bloomberg
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