Dollar rises as Argentina’s central bank stays out of the market to limit the increase

Argentina’s central bank stopped buying dollars on Monday, breaking a 27-session streak as the wholesale exchange rate climbed. The bank’s decision marked only the third time this year that it had stayed out of the currency market.

The wholesale dollar rose 3.50 pesos and closed at 1,502.50 pesos for buying and 1,511.50 pesos for selling. Trading was limited because the United States, a reference market, observed a holiday. Just $299 million changed hands in cash, compared with a monthly daily average of $657 million and $736.3 million on Friday, according to Javier Giordano of CFA.

The central bank’s absence helped prevent a stronger rise in the currency, according to the report. The dollar opened at 1,508 pesos, gradually moved toward 1,510, reached 1,512 around midday and then stabilized before closing at 1,511.50, trader Nicolás Merino of ABC Mercado de Cambios said.

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The monthly average is $657 million per day and it had even been $736.3 million on Friday.

The government has also sought to preserve its ability to contain exchange-rate increases. The Economy Ministry issued $2 billion in new notes adjusted to the official dollar, allowing it to exchange them with the central bank for a fixed-rate peso security. The operation is intended to give the bank more room to intervene and support exchange-rate stability as inflation continues to decline, the article said.

Gross reserves fell slightly to $50.733 billion, down $26 million from Friday. The bank bought only $81 million during the first five trading sessions of the month, 27% less than during the same period in August. Still, since the start of the fourth phase of the monetary program, the institution led by Santiago Bausili has accumulated purchases of $14.176 billion.

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Little by little it moved a few points higher, toward the 1,510 area, and by midday it had risen a few more points to 1,512, where it stabilized before finally closing at 1,511.50.