Argentina’s Treasury is poised to acquire substantial quantities of foreign currency through block trades, coinciding with the influx of US$7 billion from grain exports into the market. Officials from the central bank have reached out to the trading desks of prominent financial institutions on behalf of the Treasury, seeking to be informed whenever a client places a significant dollar-sale order, according to sources.
The Treasury intends to purchase those dollars directly from sellers to mitigate substantial inflows that could lead to an excessive appreciation of the peso, according to sources, one of whom verified that sales were made to the Treasury on Thursday. The Central Bank refrained from providing a comment, while the Economy Ministry did not promptly address the inquiry made. Argentina’s currency market has experienced an influx of dollars as grain exporters capitalize on a temporary tax holiday. President Javier Milei announced on Monday that he would exempt certain exports from duties in an effort to stabilize the peso, as investors departed the country following a significant electoral loss for the ruling party.
By Wednesday night, Argentina announced that the US$7-billion cap established by the government for tax-free exports had been attained. To qualify for the relief, 90 percent of proceeds must be sold into the market within 72 hours. The volume, in a market that typically sees daily trades of approximately US$500 million, has the potential to significantly bolster the peso. Although enhancing reserves has historically been a request from the International Monetary Fund, Milei has thus far focused on maintaining a robust currency to mitigate inflationary pressures. The peso, having reached a historic low of 1,475 per dollar last Friday, has subsequently experienced a rebound exceeding nine percent. Speculation regarding devaluation has significantly diminished following the announcement from Donald Trump’s administration about ongoing discussions for a US$20-billion swap line with Argentina.
Following three consecutive sessions of robust gains, the peso exhibited minimal fluctuation on Thursday, concluding at 1,337 per dollar. The government executed comparable block-trade acquisitions in June and July; however, it subsequently faced the necessity to reverse these transactions. The entity liquidated the dollars it had amassed during the sessions preceding the legislative election in Buenos Aires Province, where Milei’s libertarian party experienced a significant defeat. Milei’s Treasury is poised to capitalize on significant dollar sales in Argentina.