Demand for dollars in Argentina hit its highest since 2019 after President Javier Milei all but eliminated foreign-exchange restrictions in the crisis-prone South American nation.
About a million Argentines purchased a net total of US$1.9 billion worth of greenbacks in April, according to Central Bank data. That’s up sharply from March, when 34,000 people bought just US$6 million in US currency.
The libertarian leader announced the loosening of controls on April 11 after scoring a US$20-billion financing package from the International Monetary Fund. Among the restrictions eliminated was a US$200 limit on purchases by individuals imposed under former president Mauricio Macri during a run on the currency sparked by his unsuccessful re-election campaign against a Peronist rival.
About half of the greenbacks stayed within Argentina’s banking system as deposits increased by US$1 billion, according to the central bank report released late Friday.
Eliminating the controls, collectively known in Argentina as “el cepo,” was a bold move by Milei, who faces midterm elections of his own in October. His administration has also struggled to accumulate hard-currency reserves in recent months.
The US$2 billion in purchases “is not a surprisingly high nor surprisingly low number taking into account it was the first month without the cepo,” said Marcos Buscaglia, co-founder of Buenos Aires-based consulting firm Alberdi Partners.
Historically, dollar demand jumps just before elections. In the last decades, demand doubled or tripled on average before people went to vote, according to local brokerage Portfolio Personal Inversiones.
“We should expect greater demand for greenbacks on the eve of midterm elections on October 26,” PPI analysts led by research chief Pedro Siaba Serrate said Monday in a report to investors. “We’re awaiting May data to come to a conclusion about a more stabilised dollar demand.”
by Manuela Tobias, Bloomberg
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