Argentina Tightens Forex Controls to Curb Dollar Demand and Stabilize Peso

Xinhua Finance, Beijing, September 16 — Argentine regulators have taken action to curb the financial market's demand for the US dollar, the latest move by the government to prevent the Argentine peso from falling out of its trading band.

The National Securities Commission (CNV) issued a new interpretation of an existing rule last Friday: if brokers hold peso-denominated repurchase agreements (REPO) or other short-term loan positions in the local market, they are prohibited from selling locally traded dollar-denominated financial instruments.

This measure effectively prevents market participants from using short-term peso financing to purchase US dollars, reaffirming the libertarian government led by Milei's willingness to intervene in the market to defend the peso. The government had previously increased its purchases of dollar futures and taken steps to tighten market liquidity. Despite these efforts, the peso approached the upper limit of its trading band on Monday.

Juan Manuel Truffa, an economist at the Buenos Aires-based consulting firm Outlier, wrote, "This is clearly a tightening of foreign exchange controls."Source: Xinhua Finance