"Caputo expresses gratitude towards those emergent from their hideouts following the dollar reaching its limit"
In a significant move, the Central Bank of Argentina has intervened in the foreign exchange market to maintain the stability of the Argentine Peso. The intervention came as the dollar reached the ceiling of the exchange rate band, closing at $1.474 in the wholesale market.
According to the agreement with the International Monetary Fund, the Central Bank is authorized to sell reserves if the dollar exceeds $1.474 in the wholesale market. Reports suggest that the Central Bank has US$22,000 million available for intervention at the ceiling of the band.
The decision to intervene was made as the dollar also closed at $1.482 in the MEP and the retail dollar closed this afternoon at $1.485. The CCL closed at $1.494. Some speculate that the Central Bank offered US$507 million to defend the band and sold around US$30 million at that value.
The greater demand for dollars led the Government to impose a restriction on brokerage firms, preventing them from buying financial dollars if they maintain their portfolio or that of related companies financed with pesos through guarantees.
Federico Furiase, the director of the Central Bank, confirmed the intervention, stating that the entity had US$22,000 million to intervene at the ceiling of the band. Luis Caputo, the Minister of Economy, also thanked those who came out of their caves these last few weeks, implying support for the government.
The exchange rate cap is set for this Wednesday at $1.474.4, and the September dollar futures contract operated at $1.473, with a negative rate of 5.7%. The Central Bank's intervention is expected to help stabilize the exchange rate and provide relief to the Argentine economy.
In recent hours, Minister Caputo has adopted a more active profile on social media, keeping the public informed about the government's efforts to manage the economy. Argentine economist Federico Furiase also announced the Central Bank's reserves of US$22 billion, available for intervention at the upper limit of the currency band.
However, the intervention has caused a drop in dollar bond prices of up to 2.7%, raising concerns about the impact on the financial markets. The Central Bank's actions will be closely monitored as the situation develops.
