MercoPress. South Atlantic News Agency

Dollar soars amid Argentina's political instability

People get scared and cover themselves, Caputo argued

Argentina's Economy Minister Luis Toto Caputo announced on Thursday that the government would sell “every last dollar” to defend the current parity between the Argentine peso and the greenback. He made those remarks following a rise in the official quotation, which pierced the upper limit of its exchange rate band. Caputo insisted this approach fell within the program agreed upon with the International Monetary Fund (IMF).

“We are going to sell every last dollar at the ceiling of the band. The program was designed this way and is made so that both the Central Bank's dollars and those we have purchased can be used to defend that ceiling,” Caputo said during a TV interview.

”We will continue to defend the exchange rate band, because that is what we agreed with the Fund (the International Monetary Fund, IMF) and because, moreover, it would make no sense not to do so,” he also pointed out.

On Thursday alone, the Central Bank of Argentina (BCRA) sold US$379 million in reserves to contain the dollar's value. The official wholesale dollar reached 1,474.25 pesos per unit, and the “blue” (a euphemism for “black market”) dollar traded at AR$1,515, a 2.7% gap.

Caputo said the financial volatility stemmed from the country's political climate ahead of the national midterm elections, accusing Congress of attempting to “overthrow the president” by rejecting recent vetoes on funding bills. The minister also reassured bondholders that the government would guarantee debt payments due in January and July of next year.

President Javier Milei's political momentum keeps waning amid corruption scandals and the possibility of seeing his feeble muscle in Congress weaken further after the Oct. 26 elections.