The demand for dollars in Argentina reached its peak since 2019 following President Javier Milei’s near-complete removal of foreign-exchange restrictions in the economically vulnerable South American country. In April, approximately one million Argentines acquired a total of US$1.9 billion in foreign currency, as reported by the Central Bank. That represents a significant increase from March, when 34,000 individuals acquired only US$6 million in US currency.
The libertarian leader declared the relaxation of regulations on April 11 following the acquisition of a US$20-billion financing package from the International Monetary Fund. Among the restrictions eliminated was a US$200 limit on purchases by individuals, which had been imposed under former president Mauricio Macri during a currency run triggered by his unsuccessful re-election campaign against a Peronist rival. Approximately fifty percent of the currency remained within Argentina’s banking system, with deposits rising by US$1 billion, as indicated by the central bank’s report published late Friday.
The removal of the controls, referred to in Argentina as “el cepo,” represents a significant decision by Milei, who is preparing for his own midterm elections in October. The administration has faced challenges in building hard-currency reserves in recent months. According to Marcos Buscaglia, co-founder of Buenos Aires-based consulting firm Alberdi Partners, 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.”
Historically, there is a notable increase in demand for the dollar in the lead-up to elections. In recent decades, demand has experienced an average increase of two to three times prior to voting, as reported by 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 stated Monday in a report to investors. “We are currently awaiting the release of May data to draw conclusions regarding a more stabilized demand for the dollar.”