Argentina Sells Dollars to Stem Peso Slide as New FX Rules Take Effect

Argentina’s government stepped into currency markets on Friday, selling an estimated $150 million to $200 million in U.S. dollars to curb a decline in the peso, according to traders familiar with the matter. 

The intervention came on the first day of trading under a new foreign-exchange regime that allows wider currency fluctuations.

The move underscores the authorities’ determination to prevent excessive volatility as President Javier Milei’s administration rolls out market-oriented reforms aimed at normalizing Argentina’s long-distorted currency system.

Traders, who asked not to be identified due to the sensitivity of the information, said the dollar sales were carried out by the Treasury, rather than the central bank. Neither the Treasury nor the Central Bank of Argentina immediately commented.

Despite the intervention, the peso weakened 1.4%, ending the session at 1,475 per dollar. It marked the currency’s first trading session of the year and its debut under the newly introduced exchange-rate band system.

Announced in December, the framework allows the peso to trade within gradually expanding bands, with the range widening each month in line with inflation, replacing the previous policy that capped adjustments at 1% per month. Officials argue the new system offers greater flexibility while avoiding abrupt devaluations that could reignite inflationary pressures.

The market test comes just days before Argentina is due to make dollar-denominated bond payments on January 9, including both principal and interest. Despite persistent economic challenges, investor confidence has so far held up.

According to Bloomberg-compiled data, Argentina’s outstanding global bonds maturing between 2030 and 2038 are trading above 75 cents on the dollar, signaling expectations that the government will meet its near-term obligations.

For now, the peso’s controlled slide, and the swift dollar sales, highlight the delicate balancing act facing Argentine policymakers: allowing market signals to play a greater role while stepping in forcefully to prevent instability in a country with a long history of currency crises.