In a significant move to tackle inflation, Argentina’s central bank announced plans to sell U.S. dollars in the country’s parallel foreign exchange markets. Economy Minister Luis Caputo shared this new approach on the messaging platform X, emphasizing its role in deepening the disinflation process.
New Measures Starting Monday
Starting Monday, the central bank will issue pesos to purchase U.S. dollars on the formal exchange market and simultaneously sell an equivalent amount of dollars on the parallel “CCL” market. This strategy aims to stabilize Argentina’s monetary base, effectively halting the printing of new pesos.
Historic Announcement
“There are no more pesos printed in Argentina by any means. It is a historic novelty,” Caputo stated in a radio interview. He further explained that while they were previously reducing inflation incrementally, this measure would deliver a decisive impact.
Recent Inflation Trends
This announcement follows the release of official data showing an end to a five-month trend of slowing inflation, with June’s monthly inflation rate higher than May’s. The government, led by President Javier Milei, aims to stabilize the money supply, reduce inflation, and narrow the gap between Argentina’s official and parallel exchange rates.
Currency Market Conditions
Argentina’s peso has been declining in parallel markets, diverging significantly from the official rate due to stringent currency controls. As of Friday, the official exchange rate was 919.5 pesos per dollar, while the “CCL” rate was 1,416.2 pesos per dollar. The black market “blue” rate also hit a historic low of 1,500 pesos per dollar.
Presidential Support
President Milei, attending the Sun Valley Conference in Idaho, praised the new measures. In a phone interview with Argentine news channel LN+, he highlighted the importance of halting the increase in the monetary base, describing it as powerful news that would speed up the deflation process.
Progress Under Milei’s Leadership
Since President Milei took office late last year, Argentina has seen a significant reduction in inflation, decreasing from 25.5% in December to 4.2% in May, with June’s figure slightly higher at 4.6%.