Argentina To Sell Dollars On Parallel Market To Tame Inflation

Argentina's central bank will start selling U.S. dollars in the country's parallel foreign exchange markets in an effort to combat inflation and stabilize the country's money supply, the government said, Jorge Otaola reported for Reuters.

The strategy of President Javier Milei aims to stabilize the money supply, bring down inflation, and help close the widening gap between Argentina's official and parallel exchange rates traded in financial markets. I Photo: Diana2803 Wikimedia Commons

Economy Minister Luis Caputo announced the new strategy on messaging platform X, saying it would "contribute to deepening the disinflation process."

Starting Monday, when Argentina's central bank issued pesos to buy U.S. dollars on the formal exchange market, the bank aims to effectively balance Argentina's monetary base by selling an equivalent amount of dollars on the parallel "CCL" exchange market, Caputo said.

"There are no more pesos printed in Argentina by any means. It is a historic novelty," Caputo later said in a radio interview.

"We were beating inflation by (a few) points and this is the 'knock-out' blow," the minister added. The announcement comes after official data published on Friday showed a five-month streak of slowing inflation ended in June when monthly inflation came in higher than in May.

The strategy of President Javier Milei aims to stabilize the money supply, bring down inflation, and help close the widening gap between Argentina's official and parallel exchange rates traded in financial markets.