In recent weeks, Argentina’s central bank has begun to slow down its aggressive purchasing of dollars, a strategy aimed at rebuilding reserves under new President Javier Milei. This shift in approach is believed to be linked to lower-than-expected sales of grains by local farmers. In the first week of June, the central bank made net purchases of around $99 million, marking the lowest figure this year following a gradual decline over the past month.
These developments highlight the challenge the central bank faces in maintaining the rapid pace of foreign currency accumulation as it aims to rebuild reserves that were severely depleted when Milei assumed office in December. Since his inauguration, the central bank has acquired over $17 billion in foreign currency, primarily to pay off creditors such as the International Monetary Fund (IMF). This accumulation of reserves is crucial for restoring economic and financial stability in Argentina, which has been plagued by years of crisis.
The government’s ability to lift stringent currency controls that hinder business and trade hinges on the central bank’s successful efforts to build up reserves. As the country navigates these economic challenges, the central bank’s shift in approach under Milei’s leadership will be closely monitored for its impact on Argentina’s financial outlook.
