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Argentina Takes Cautious Path on Reserve Build-Up as Debt Rebuy Seen as First Step

Sustainable accumulation could require a 10–15% peso depreciation, according to Morgan Stanley.

Overview

  • Economy Minister Luis Caputo says adding international reserves is a priority focused on strengthening the BCRA’s balance rather than using dollars to cover imminent debt maturities.
  • Several economists interpret recent signals as a plan to buy only the minimum needed to avoid pressuring the exchange rate and triggering peso weakness.
  • Morgan Stanley, after meetings in Buenos Aires, expects a formal FX-buying program to begin only after a liability‑management operation reduces near‑term foreign‑currency debt.
  • The bank’s team argues that eliminating the current‑account deficit to enable durable reserve accumulation may require a 10%–15% peso depreciation from current levels.
  • Market reports note recent dollar purchases were executed by the Treasury rather than the central bank, with thin FX liquidity making a discretionary approach more likely than a preannounced calendar, while Juan Carlos De Pablo says reserve targets remain achievable.