Argentina blew $1 billion in two days to fend off devaluation

[Caribbean Cool]

Today quoted from Bloomberg at 19:21 hours

 

[Warm_breeze]

ooof.

 

[Ronnie Hotdogs]

Wow doesn’t look like this will end well…

 

[FrankPintor]

No worries, we’re in good hands, Caputo says he’ll defend the exchange rate to the last Dollar, and Milei says he’s close to getting another loan, from the US this time. Nobel prizes all around for the best government in history!

 

[carride]

The bank's latest intervention totaled $678 million, its largest for a single day since October 2019, bringing the amount sold in the last three sessions to $1.1 billion.

https://www.reuters.com/world/americas/argentinas-central-bank-makes-biggest-daily-dollar-sale-six-years-curb-peso-2025-09-19/

 

[gracielle]

¿Llegan los marines? Milei habló de la posibilidad de un 'préstamo directo' del Tesoro de EE.UU.

El presidente aseguró que exploran distintas vías para poder hacer frente a los vencimientos de deuda del año que viene. Y se reflotaron palabras del secretario del Tesoro estadounidense en su visita al país, cuando habló de un posible "salvataje" para la Argentina.

www.perfil.com

19 September 2025 at 7:20pm
Are the Marines coming? Milei spoke of the possibility of a "direct loan" from the U.S. Treasury. The president assured that they are exploring various avenues to meet next year's debt maturities. And he revived the words of the US Treasury Secretary during his visit to the country, when he spoke of a possible "bailout" for Argentina. Amid the dollar's rise and the country risk index rising, President Javier Milei confirmed that they are maintaining an open channel of dialogue with the United States Treasury to obtain a direct line of financing.
The objective? To cover debt maturities in January and July 2026.

"We were clear that this year was going to be very complicated and we had already begun to develop strategies to cover the payments that Argentina has next year, which are US$4 billion in January and US$4.5 billion in July," the head of state said during an interview with
La Voz del Interior....

 

[dandelucanyc]

They didn't blow that amount, they spent that amount. But they received that amount of pesos back at the market price. Of course if the peso declines, as it almost certainly will, they will lose money, but they're not losing the total amount, just whatever percentage the peso declines.

 

[Caribbean Cool]

Argentina goes to Trump on Tuesday....nothing to worry about.

 

[Caribbean Cool]

They didn't blow that amount, they spent that amount. But they received that amount of pesos back at the market price. Of course if the peso declines, as it almost certainly will, they will lose money, but they're not losing the total amount, just whatever percentage the peso declines.

Alfred E. Neuman makes more sense than that comment.

 

[FrankPintor]

They didn't blow that amount, they spent that amount. But they received that amount of pesos back at the market price. Of course if the peso declines, as it almost certainly will, they will lose money, but they're not losing the total amount, just whatever percentage the peso declines.

Am I being invoked here? If so, I’d suggest that in a narrow, rather pedantic sense, you’re correct: there are now 1 billion Dollars worth of Pesos (rather less, since the Peso has continued losing value) sloshing around the Argentinian economy.

Did anyone want those Pesos? No. In fact, it’s a stated objective of the government (they make a lot of contradictory statements, I know) to “dry up” Peso liquidity. Adding billions more isn’t exactly going to help.

Is this where the increase in M2 money supply is coming from?

Then you have the impact on the exchange rate, adding billions of Pesos on one side, and having fewer Dollars to burn in defence of the Peso on the other side. That will worsen the exchange rate, in a vicious circle with each iteration of intervention. Perhaps ending up with something like Black Friday where the British and Irish pounds (then linked) were forced out of the ERM by speculators. Only this time it won’t be so nice.

So yes, considering the big picture, I think “blow” is the appropriate metaphor.

The only way out here is for Milei to accumulate a war chest sufficiently big to wage shock and awe on any speculation against the Peso. That’s why he’s trying to set up a currency swap with the US. Maybe it will come, but let’s be clear, there is no plan.