New Restrictions Implemented by Central Bank
Argentina's government, under President Javier Milei, has imposed new restrictions on dollar purchases, effective September 26, 2025. The measures, formalized through Central Bank Communication A 8336, are designed to prevent speculative currency maneuvers and reinforce the country's depleted foreign currency reserves. This move follows a period where the Central Bank reportedly expended US$1.1 billion in the preceding week without successfully stabilizing the national currency, the peso.
Targeting Arbitrage and Market Distortions
The core of the new regulation prohibits individuals who purchase dollars on the official market from engaging in the financial dollar market for a period of 90 days, and vice versa. This 'cross restriction' revives a rule that had been previously rescinded earlier in the year and now extends its scope to include all individuals, moving beyond its former application to only company executives and financial directors. The government's primary objective is to counteract an arbitrage strategy, commonly known as a 'rulo,' where individuals would acquire dollars at the official exchange rate and then resell them in financial markets, such as the MEP or CCL dollar, at a higher price for quick profits. Central Bank director Federico Furiase stated that the decision aims 'to prevent forex market distortions,' specifically addressing the 'brecha' or gap between the official and financial dollar rates.
Bolstering Reserves and Meeting Debt Obligations
The restrictions are a direct effort to boost Argentina's dwindling foreign currency reserves. The government also seeks to reassure investors about its capacity to meet substantial debt maturities scheduled for 2026. The accumulation of dollars by the Central Bank and the Treasury to fulfill debt obligations is a key condition within Argentina's agreement with the International Monetary Fund (IMF), forming a crucial part of the country's broader economic program. Following the implementation of these new exchange restrictions and agricultural exports, the Central Bank's gross reserves saw an immediate increase of US$1.9 billion, marking the largest daily rise since August 4 and bringing the total to over US$41 billion. This surge was largely attributed to Treasury purchases amounting to US$1.3 billion, as confirmed by Economy Minister Luis Caputo.
Broader Context of Currency Controls
These latest restrictions are part of a complex history of currency controls in Argentina. While President Milei's administration has expressed a long-term goal of lifting all currency controls, potentially by January 1, 2026, these recent measures represent a tightening in the interim. Earlier in his presidency, in December 2023, the government had devalued the peso by 54% and introduced a 'crawling peg' system. Additionally, Argentina recently formalized a US$20 billion currency swap agreement with the U.S. Treasury, aimed at further stabilizing prices and reinforcing foreign currency reserves.
5 Comments
Ongania
It's good to see the reserves increase, which is vital for debt obligations, yet relying on controls rather than fundamental reforms might only offer temporary relief. The long-term plan is key.
Fuerza
Stopping arbitrage is understandable, as it drains resources, but these restrictions often stifle legitimate economic activity too. We need to watch for unintended consequences.
Manolo Noriega
The immediate boost to reserves is a positive sign for meeting IMF targets, but it contradicts the stated goal of eventually lifting all controls. This creates uncertainty about future economic policy.
Fuerza
Short-term gain for long-term economic disaster. History repeats itself.
Ongania
Preventing currency speculation is a valid concern for any struggling economy, however, the reintroduction of these types of controls could deter much-needed foreign investment. It's a risky strategy.