Economy Minister Luis Caputo informed investors in New York that Argentina intends to repurchase sovereign bonds and begin accumulating foreign reserves, even as the peso remains within its designated trading band, according to sources familiar with the situation. In a recent meeting attended by approximately 40 investors, organized by JPMorgan Chase & Co., Caputo indicated that President Javier Milei does not plan to float Argentina’s currency. Instead, he intends to maintain its trading within predetermined bands, as reported by sources who requested anonymity due to the private nature of the event.
Caputo indicated that he might contemplate accelerating the rate of band adjustments to 1.5 percent per month, contingent upon inflation and the demand for the peso, according to sources. The trading range’s upper and lower limits are presently modified by one percent each month, facilitating a gradual depreciation of the peso. Caputo anticipates revealing the comprehensive plan – encompassing a timeline for reserve accumulation, the debt buyback, and a debt-for-education bond – within 30 days, according to a source, citing his statements. Requests for comment directed to the press offices of JPMorgan and Argentina’s Economy Ministry went unanswered after business hours on Friday.
Following the recent success of Milei’s party in Argentina’s midterm elections, a significant number of investors contend that this moment presents an opportunity for the president to recalibrate his policy framework. Pacific Investment Management Co. advocated for the libertarian to permit the peso to float without restrictions. Argentine officials have refuted any plans to modify the currency regime; however, Caputo indicated a willingness to adjust regulations to permit government purchases of dollars when the peso is positioned within the band and market liquidity remains robust. Caputo did not indicate a timeline for the commencement of dollar purchases; however, he anticipates that the currency will continue to appreciate as demand for the peso increases, as reported by sources.
Following Argentina’s agreement with the International Monetary Fund for a US$20-billion deal in April, the Central Bank has faced challenges in accumulating foreign reserves as intended. Instead, it has been compelled to sell dollars to support the peso in the face of pre-election volatility. Argentina intends to repurchase global bonds maturing in 2029 and 2030, utilizing a more cost-effective funding source, as stated by Caputo during the meeting. He stated that Argentine officials have entered into a non-disclosure agreement with the United States, which restricts him from disclosing any details. Earlier Friday, Caputo and Milei participated in a private event organized by the Americas Society/Council of the Americas.