MercoPress. South Atlantic News Agency

Argentine forex market volatility: Central bank intervenes to prop the dollar, first time in seven months

The Peso touched the floor of the central bank’s “no-intervention” trading band at 37.355 per U.S. dollar on Thursday, opening the door to buy dollars

Argentina’s Peso closed stronger on Thursday, but remained outside the limits of a trading band set by the central bank after it intervened in the market by buying US$ 20 million.

The Peso touched the floor of the central bank’s “no-intervention” trading band at 37.355 per U.S. dollar earlier on Thursday, according to traders, which opened the door for the monetary authority to buy dollars in the foreign exchange market.

Under a US$ 56.3 billion standby financing agreement with the International Monetary Fund, Argentina has an adjustable trading band for the Peso. On Thursday, the band ranged from 37.355 to 48.342 per dollar.

The currency has been shaken since last year amid emerging markets volatility.

“If they continue to intervene so that the exchange rate remains on the floor of the trading band, we should see a more accelerated decline in the rate of ‘Leliqs,’” said former Argentine finance undersecretary Miguel Kiguel, referring to the regular auctions of short-term notes known as “Leliqs.”

The last time the central bank bought dollars in the foreign exchange market was in June 2017.