(Bloomberg) -- Argentina's peso rose in the spot market for the first time in 12 months on Friday after the central bank ordered financial institutions to maintain their foreign currency holdings steady through to the end of the month, forcing some to sell dollars.
The peso strengthened 0.02% to 99.94 to the dollar today, even as the central bank bought $210 million, the most greenbacks it has acquired in a single day since July 13. The spot peso is controlled by the central bank through a crawling peg.
“As a result of the measures dictated by the central bank, the financial entities began a rapid process of compliance with the regulations that resulted in a significant supply of foreign currency in the market,” Gustavo Quintana, a trader in PR Corredores de Cambio, said in report sent by message.
The one-day gain doesn't represent a change in fortunes for the peso though. Soaring demand for hard currency means dollars now cost 216 pesos on the parallel market used to skirt currency controls, more than double the official rate. With foreign currency reserves declining and the peso weakening on unofficial markets, many Argentines expect the government to speed up the currency's devaluation in the spot market once national midterm elections in November are out the way.
Argentines Are Rushing for Dollars as Devaluation Bets Soar
Argentina's central bank sold $230 million during the first four days of November to support the peso.
“Probably from the first fortnight of the month a slight increase in the income of exporters of cereals and oilseeds will begin to be observed as a consequence of the start of the next grain sales campaign, something that will also help the central bank to defend the current exchange policy,” Quintana said.
©2021 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
