Argentina’s Central Bank Sells $678M to Defend Peso as Reserves Shrink

Argentina’s central bank made its largest single-day dollar sale in nearly six years on Friday, offloading $678 million to stabilize the peso amid soaring demand for U.S. currency. The intervention brings total sales over the past three sessions to $1.1 billion, highlighting mounting pressure on reserves ahead of October’s midterm elections.

Economy Minister Luis Caputo reaffirmed the government’s commitment to defending the peso, vowing to sell “every last dollar” within the official exchange-rate band. The wholesale peso held steady at 1,475 per U.S. dollar after the central bank’s action, though the informal “blue” market hit a record 1,520, sliding more than 6% during the week.

Analysts warn the pace of intervention could drain about $10 billion before the vote—around 70% of the IMF’s recent $20 billion disbursement. While official reserves stand at $39.26 billion, net liquid reserves available for intervention are estimated at just $6 billion. Such depletion could complicate near-term debt obligations and force increased bond issuance.

Caputo insisted the Treasury is preparing to cover January debt payments and will provide clarity to bondholders soon. However, investor sentiment remains fragile: Argentina’s country risk index surged to 1,500 basis points, its highest since August 2024. Over-the-counter bonds slid 9.2% this week, while Buenos Aires’ main stock index dropped 0.7% Friday.

The IMF-backed exchange rate framework is under strain as markets doubt the government’s ability to maintain stability before elections. The outcome of October’s congressional vote will determine whether President Javier Milei can push forward his reform agenda or face new political hurdles.