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2h ago

Argentina Debuts Inflation-Indexed FX Bands as Central Bank Targets Reserve Build-Up

Economists warn the framework remains transitional, citing inflation pressures alongside unresolved controls.

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Overview

  • Starting Friday, the exchange-rate band will adjust by the latest inflation reading, with a 2.5% update set for January based on November CPI.
  • The BCRA plans to buy foreign currency up to 5% of daily market turnover and may execute block purchases, with operations calibrated to money demand.
  • Traders reported late-December dollar sales by the Treasury to keep the wholesale rate from testing the prior band ceiling, ending 2025 near 1,455 pesos versus a 1,526.09 cap.
  • Analysts caution that persistent monthly inflation and pending fuel and tariff increases could strain the band, risking scenarios where the central bank sells dollars instead of accumulating reserves.
  • Fundación Mediterránea labels the scheme a bridge solution, flagging indexation to past inflation and ongoing corporate FX restrictions, and points to Peru’s managed float as a model.