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

[carride]

Milei’s fall from grace: Argentina’s stock market becomes the world’s worst performer in 2025 -
https://english.elpais.com/economy-...comes-the-worlds-worst-performer-in-2025.html

 

[gracielle]

21 Sept 2025 by Pablo Wende

Expectativa por el megapréstamo del Tesoro americano: frenaría en seco la corrida cambiaria y le daría aire al Gobierno

Contar con una nueva línea crediticia de emergencia sería clave además para despejar dudas sobre la capacidad de pago del Gobierno de cara a los vencimientos del 2026. Se espera que los mercados reaccionen favorablemente mañana

www.infobae.com

Expectations for the US Treasury's mega-loan: it would halt the currency run and give the government some breathing space. Having a new emergency credit line would also be key to clearing up doubts about the government's payment capacity for the 2026 payments. Markets are expected to react favorably tomorrow....
....Another week is coming in which the Central Bank will be under intense pressure. Now all eyes are on Javier Milei's meeting with Donald Trump on Tuesday in New York. A simple declaration of support from the US president may not be enough, or would even be counterproductive, in this critical context. The government needs a significant monetary contribution from the US Treasury to break out of the trap it finds itself in.

 

[mageesa]

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

This sort of went under the radar, when the Argentine delegation recently got all the way to the USA before they were told the visa-ending ceremony was cancelled. Trump is like Lucy and her football at times; I'll believe it when the money actually changes hands.

Argentinian officials forced to fly home from US after Kristi Noem failed to inform them visa ceremony was canceled: report

‘Let’s just say this was not a great look from us,’ one Trump administration official told Axios

ca.news.yahoo.com

 

[RichardAlem]

Even Zero Hedge is losing faith in Milei's efforts to resuscitate an Argentine economy headed down the path to becoming South America's version of the Congo.

Milei Admits "The Market Is In Panic Mode" As Argentine Capital Exodus Accelerates | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

 

[FrankPintor]

If the currency swap arrangement goes through (Caputo is talking about “only” USD 10 billion now), I imagine there will be strings attached, the most important being to wind up the swap agreement with China. Milei will be kept on a short leash and Argentina’s interests will be subservient to those of the US.

 

[sergio]

21 Sept 2025 by Pablo Wende

Expectativa por el megapréstamo del Tesoro americano: frenaría en seco la corrida cambiaria y le daría aire al Gobierno

Contar con una nueva línea crediticia de emergencia sería clave además para despejar dudas sobre la capacidad de pago del Gobierno de cara a los vencimientos del 2026. Se espera que los mercados reaccionen favorablemente mañana

www.infobae.com

Expectations for the US Treasury's mega-loan: it would halt the currency run and give the government some breathing space. Having a new emergency credit line would also be key to clearing up doubts about the government's payment capacity for the 2026 payments. Markets are expected to react favorably tomorrow....
....Another week is coming in which the Central Bank will be under intense pressure. Now all eyes are on Javier Milei's meeting with Donald Trump on Tuesday in New York. A simple declaration of support from the US president may not be enough, or would even be counterproductive, in this critical context. The government needs a significant monetary contribution from the US Treasury to break out of the trap it finds itself in.So

So the US taxpayers are supposed to bail out Argentina while inflation keeps going up in USA and the last jobs statistics were terrible?

 

[LuckyLuke]

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.

I'm not understanding the balance sheet equation you reference here. The BCRA sold dollars into the market, that requires buying (existing) pesos. The balance sheet entry is a reduction to BCRA dollars reserves and an increase in BCRA peso holdings. Market players (banks for example) looking to liquidate their client peso denominated instrument holdings for dollar instruments (causing market pressure) were able to find a buyer (BCRA) at that day's exchange rate to ensure that a lack of dollar liquidity didn't drive dollar prices further up.

There are LLA hinchas celebrating that the BCRA successfully removed more pesos from the economy and that this was a good thing. Of course, none of these hinchas really understand the market forces at work here.

This would theoretically be a decrease in M2 supply assuming the BCRA parked those pesos instead of providing the liquidity to banks through a different liquidity program.

 

[FrankPintor]

I'm not understanding the balance sheet equation you reference here. The BCRA sold dollars into the market, that requires buying (existing) pesos. The balance sheet entry is a reduction to BCRA dollars reserves and an increase in BCRA peso holdings. Market players (banks for example) looking to liquidate their client peso denominated instrument holdings for dollar instruments (causing market pressure) were able to find a buyer (BCRA) at that day's exchange rate to ensure that a lack of dollar liquidity didn't drive dollar prices further up.

There are LLA hinchas celebrating that the BCRA successfully removed more pesos from the economy and that this was a good thing. Of course, none of these hinchas really understand the market forces at work here.

This would theoretically be a decrease in M2 supply assuming the BCRA parked those pesos instead of providing the liquidity to banks through a different liquidity program.

Where do the Pesos come from? I typed this into my search machine: “when the BCRA sells Dollars for Pesos, where do the Pesos come from”? and I got this: “When the Central Bank of Argentina (BCRA) sells dollars for pesos, the pesos are created by the central bank itself, which can issue new currency as needed”. Right…

 

[LuckyLuke]

Where do the Pesos come from? I typed this into my search machine: “when the BCRA sells Dollars for Pesos, where do the Pesos come from”? and I got this: “When the Central Bank of Argentina (BCRA) sells dollars for pesos, the pesos are created by the central bank itself, which can issue new currency as needed”. Right…

I'm no banking genius, but I don't understand the answer you were given.

The pesos come from regional banks, who have peso contracts or expiring dollar contracts. The instruments are traded on domestic (regional bonds/Merval) and international market (sovereign bonds/S&P) platforms.

The BCRA can, through various lending programs, inject liquidity to the banks by either being a lender to banks or a buyer of their instruments. The US Federal Reserve for example has been known to by "toxic" financial instruments directly from banks to remove them from the balance sheet such as during the 2008 crisis when they bought Mortgage Backed Securities and Collateralized Debt Obligations.

Many people have a misconception that because the Central Bank often overseas the physical print house of the currency, that they are "printing" it into existence. But this really isn't how it works. The print house merely ensures that the regional banks have sufficient paper currency on hand, can replace damaged notes and receive any new denominations authorized by the Treasury Department. The Central Bank regulates the percentage of reserves required at banks (based on their client deposits) which determines what loans and investments banks can offer beyond the deposits on hand. It is this percentage and these methods that currency is essentially "created". This is commonly known as fractional reserve banking.

The new loan balance sheet entry from the bank to the customer is:

Debit to asset (Loan receivable from customer)
Credit to liability (customer deposit account)

This is how most of new currency is created, because you will notice no actual bank money was removed. The loan is simply created "out of thin air".

 

[dlish]

And the blue is back down 4%