Argentina's Peso Stabilizes Post-Reform Shock

Argentina's peso strengthened to 1,065 per dollar after reforms, surprising traders. Recent reforms by President Javier Milei removed capital controls, causing initial currency instability. Despite the volatility, the central bank will not intervene unless the peso drops below 1,000 per dollar. The return to stability indicates positive market adaptation.

In a surprising turn of events, Argentina's official peso strengthened to around 1,065 pesos per dollar on Monday. This rise comes after the currency fell sharply last week following the removal of capital controls and a shift to a broader trading band implemented by the libertarian government led by President Javier Milei.

The peso's recent decline resulted from the government's decision to scrap long-standing capital controls, replacing the 'crawling peg' system with a wider trading range. These reforms, championed by President Milei, are part of broader economic changes aimed at liberalizing Argentina's financial system.

Despite this initial volatility, government officials, including President Milei, have assured that the central bank will refrain from intervening in the foreign exchange market unless the peso dips below the 1,000 per dollar mark. This recent stabilization signals a positive initial response from the market to the reform measures.

(With inputs from agencies.)