Argentina’s central bank has announced a new strategy to combat inflation and stabilize the country’s money supply by selling U.S. dollars in the parallel foreign exchange markets. Economy Minister Luis Caputo unveiled the plan on Saturday, aiming to deepen the disinflation process.
Starting Monday, the central bank will purchase U.S. dollars on the formal exchange market using pesos, and then sell an equivalent amount of dollars on the parallel “CCL” exchange market. This move will effectively balance Argentina’s monetary base and help tackle the issue of inflation. Caputo emphasized that there are no more pesos being printed in Argentina through any means, marking a significant shift in the country’s economic policy.
President Javier Milei expressed his support for the new strategy, highlighting the importance of stabilizing the money supply and closing the gap between official and parallel exchange rates. The move comes as the Argentine peso continues to weaken in parallel markets, with significant divergences between the official and parallel rates.
Impact on the Economy
The government’s plan is expected to bring down inflation rates and accelerate the deflation process in the economy. Since Milei came into power, the inflation rate has decreased significantly, from 25.5% in December to 4.6% in June. The new measures aim to build on this progress and further stabilize the economy.
Global Investor Interest
President Milei and Caputo are currently at the Sun Valley Conference in Idaho, where they are engaging with international investors. The announcement of the new strategy has generated interest among investors, as it signals a strong commitment to addressing inflation and stabilizing the economy. Milei emphasized the importance of the news, stating that the monetary base in Argentina is no longer increasing, which is a significant development for the country’s economic outlook.
Overall, Argentina’s central bank’s decision to implement new measures to combat inflation demonstrates a proactive approach to tackling economic challenges. By focusing on stabilizing the money supply and addressing inflation, the government is taking steps to strengthen the country’s economy and create a more conducive environment for sustainable growth. With the support of President Milei and the engagement of international investors, Argentina is poised to make significant strides in its economic recovery.