Core Viewpoint - Argentina's central bank has conducted its largest single-day dollar sale in nearly six years, selling $678 million to support the peso amid political instability and high demand for dollars from institutional investors [2] Group 1: Central Bank Intervention - The recent intervention totaled $678 million, marking the largest single-day sale since October 2019, bringing the total sales over the past three days to $1.1 billion [2] - The central bank aims to manage liquidity at the upper end of its floating exchange rate range as the peso hovers at historical lows [2] - Economic Minister Luis Caputo stated that the central bank will sell every dollar in reserves at the upper end of the exchange rate range [2] Group 2: Market Reactions - Following the central bank's intervention, the wholesale exchange rate for the peso closed at 1474.75 per dollar, near the upper limit of the exchange rate range [3] - In the parallel exchange market, the peso fell to a historical low of 1520 per dollar, depreciating over 6% for the week [4] - Analysts estimate that if the current pace of dollar sales continues, reserves could decrease by approximately $10 billion before the elections, which is about 70% of the funds already disbursed by the IMF [4] Group 3: Economic and Political Context - The current net international reserves reported by the central bank stand at $39.26 billion, but usable reserves for intervention are estimated at only $6 billion [4] - The "country risk" indicator has risen to its highest level since August 2024, hovering around 1500 basis points, with off-market bonds averaging a decline of 1.4% and a cumulative drop of 9.2% for the week [4] - President Javier Milei emphasized the importance of stabilizing the peso, stating that he will do everything possible to protect it, as a failure could lead to soaring prices and undermine public support for his reform agenda [5] Group 4: Political Challenges - The political environment has worsened, with Milei facing challenges in securing congressional support for his reform agenda ahead of the critical midterm elections in October [2][5] - Recent local election losses have raised concerns about the upcoming congressional elections, as economic slowdowns and cuts in key areas have fueled public discontent [6] - The leftist Peronist opposition has gained ground, particularly in Buenos Aires, further unsettling investors [6]

Core Viewpoint - Argentina's central bank has conducted its largest single-day dollar sale in nearly six years, selling $678 million to support the peso amid political instability and high demand for dollars from institutional investors [3]. Group 1: Central Bank Actions - The recent intervention of $678 million marks the largest single-day sale since October 2019, bringing the total sales over the past three days to $1.1 billion [3]. - The central bank aims to manage liquidity within its floating exchange rate range, with the peso hovering at historical lows [3]. - Economic Minister Luis Caputo stated that the central bank will sell every dollar in reserves at the upper end of the exchange rate range [3]. Group 2: Market Reactions - The official exchange rate for the peso closed at 1474.75 per dollar, near the upper limit of the exchange rate range, while the parallel market saw the peso drop to a historical low of 1520 per dollar, reflecting a weekly depreciation of over 6% [3][5]. - Analysts estimate that if the current pace of dollar sales continues, reserves could decrease by approximately $10 billion before the elections, which is about 70% of the funds already disbursed by the IMF [5]. Group 3: Economic and Political Context - The deteriorating market environment raises investor skepticism ahead of the critical mid-term elections in October, which may affect President Javier Milei's ability to secure necessary congressional support for his reform agenda [3]. - The "country risk" indicator has risen to its highest level since August 2024, hovering around 1500 basis points, with off-market bonds averaging a decline of 1.4% and a cumulative drop of 9.2% for the week [5]. Group 4: Political Implications - President Milei emphasized the importance of stabilizing the peso, stating that he will do everything possible to protect the quality of life for Argentinians [7]. - The government's recent electoral defeats have raised concerns among investors, as they are seen as a precursor to the upcoming congressional elections [9][10].