Argentina Peso Holds 21% Below Its Ceiling on 5 October

On Monday, October 5th, Argentina's peso maintained its stability, sitting 21% below the upper limit of its official exchange rate band. The central bank's reserves, last reported at US$48.653 billion on Friday, 2 October, served as a buffer for the peso, keeping it calm for US investors in Argentine bonds and shares. The Banco Central de la República Argentina (BCRA) purchased dollars throughout the week, with purchases ranging from US$11 million to US$160 million.

This week's purchases, the highest since July, totaled US$369 million. The central bank had only bought US$473 million in all of September, bringing the year's total to US$14.696 billion. The bank's buying activities added pesos to the economy, with TN estimating the injection at about 545 billion pesos (around US$358 million) over four sessions to October 2nd.

The official BCRA series demonstrates the swift movement of Argentina's reserves. On September 3rd, gross reserves were US$50.79 billion, but they dropped to US$46.09 billion by September 30th before recovering to US$48.65 billion by October 5th, aided by purchases and a 0.3% increase in gold reserves. The central bank has not provided detailed explanations for the month-end decline.

Gross reserves encompass non-freely usable funds, such as bank deposits held at the central bank. The IMF targets net reserves instead, a stricter measure that excludes these funds. The government reported beating the net reserves target for the first half of 2026, which was set at minus US$8.6 billion, according to Infobae. Argentina had missed the end-December target and required a waiver.

Since April 2025, Argentina has lifted most currency controls, allowing the peso to float between a floor and a ceiling. If the dollar hits the ceiling, the BCRA sells dollars to defend it. For October 2026, the ceiling increased from 1,920.44 pesos per dollar on October 1st to 1,950.97 on October 30th. The floor will decrease in sync.

On Friday, the wholesale dollar fell 4.50 pesos per dollar, or 0.3%, to close at 1,520. The parallel "blue" dollar traded at 1,560 on Monday morning. The BCRA reference rate decreased to 1,519.25, while the blue dollar ended at 1,550. The IMF approved a US$20 billion, 48-month loan in April 2025, with approximately US$15.8 billion already disbursed after two reviews.

A technical mission from the IMF visited Buenos Aires from September 21st to 29th for the third review. On October 1st, the IMF's communications director, Julie Kozack, stated that discussions would continue in the coming weeks. To further increase Argentina's reserves, Economy Minister Luis Caputo projected purchases of US$19.438 billion by December during a recent briefing.

He connected the increased fund to the 2027 presidential election. There is a stabilizer and a risk involved. Faster buying and a distant ceiling can calm markets, but the country risk remains high (Argentina Country Risk Hits 635 as IMF Backs Programme). Savers are also rapidly buying dollars, which absorbs much of the export surplus.

Our earlier report, Argentina Central Bank Buys US$369 Million in a Week, covered this tension. For US investors, these reserves are crucial in determining whether Argentina can pay its dollar bonds and maintain a steady peso. Rising reserves and a distant band ceiling generally support Argentine bonds and US-listed shares. For travelers, a stable official rate ensures that card payments and cash exchanges have similar costs.

The parallel "blue" dollar ended at 1,550 on Monday, slightly higher than the official rate's ceiling of 1,950.62. The overall risk is a repeat of September, when gross reserves dropped by approximately US$4.7 billion between September 3rd and 30th, according to BCRA data. It remains uncertain whether the IMF will reach a staff-level agreement in October or grant a waiver.

The size and timing of the next disbursement also depend on a board vote. The range for the peso on October 5th was 722.28 to 1,924.62 pesos per dollar.