Argentina's Peso Pressure: Central Bank's Crucial Intervention

Argentina's central bank intervened by selling $45.5 million from its reserves to support the peso amid market uncertainty before legislative elections. With the peso at the upper limit of its floating band, the central bank's reserves now stand at $40.539 billion. President Javier Milei faces pressure ahead of Sunday’s elections.

Amid a surge in market uncertainty prior to forthcoming legislative elections, Argentina's central bank executed a pivotal intervention on Tuesday, offloading $45.5 million from its reserves to buttress the peso. The intervention occurred as the peso hovered at the upper threshold of its controlled floating band.

The move came as apprehensions about the elections prompted a pivot towards dollar assets, with Javier Milei's libertarian faction poised to expand its congressional presence from a current minority. The central bank maintained the peso within a managed band since April, intervening to control the exchange rate between 938.33 and 1,491.07 pesos per dollar for purchase and sale, respectively.

In the aftermath of Tuesday's intervention, Argentina's international reserves were recorded at $40.539 billion. Rising political vulnerabilities exert pressure on President Javier Milei's administration, compelling him to pursue a $20 billion currency swap with the United States, ensuring adherence to an impending public debt obligation.

(With inputs from agencies.)