Argentina’s government under President Javier Milei Alleges Dollar Reserves Depleted to Defend Peso, Estimate Only $1 Billion Remains
Amid a currency crisis, Argentina has reportedly burned through its dollar reserves to prop up the peso ahead of key elections
Argentina’s government under President Javier Milei is reportedly tapping deep into its dollar reserves in a desperate bid to shield the peso from collapse, with market analysts estimating that only around USD 1 billion remains.
The aggressive interventions underscore the fragility of its foreign exchange position as the legislative elections on October 26 loom.
In recent months, the Central Bank has conducted massive dollar sales to defend the peso’s official trading band, including its largest single‐day disposal in six years—approximately USD 678 million.
Over a three‐session span, it sold some USD 1.1 billion at the top of the exchange band.
Despite gross reserves exceeding USD 39 billion, net usable reserves are believed to be as low as USD 6 billion after accounting for debt obligations and currency commitments.
The depletion is driven by consistent arbitrage and capital flight.
From April to August alone, individuals and firms extracted USD 9.5 billion from the central bank to exploit parallel market spreads, draining the official reserve base.
The imbalance between export revenues and external obligations exacerbates the erosion, with economist reports indicating USD 12.3 billion in net outflows over the past eleven months.
In response to the drain, Milei’s administration has launched a campaign to coax dollars out of informal hoards—what Argentines call “under-the-mattress” savings.
The “Historical Reparation Plan” allows citizens to deposit undeclared U.S. dollars in local banks without proving their source and lifts reporting requirements for large transactions.
Authorities hope to redeposit billions held outside financial flows into the formal economy.
The economic strain has put pressure on Milei ahead of the midterm vote.
His government also plans to dispatch Economy Minister Luis Caputo to Washington for urgent talks on further U.S. support or a swap line to buffer the reserve shortfall.
Even as rhetoric from the U.S. hints at backing, observers warn that tapping remaining dollars to defend the peso may only delay a deeper crisis unless structural reforms stabilize trade, boost exports, and restore confidence in Argentina’s fiscal trajectory.
Markets are watching closely: a sustained defense of the peso could deplete reserves entirely, forcing a regime shift in Argentina’s exchange framework and triggering renewed volatility in bond spreads, inflation expectations, and macro stability.
The aggressive interventions underscore the fragility of its foreign exchange position as the legislative elections on October 26 loom.
In recent months, the Central Bank has conducted massive dollar sales to defend the peso’s official trading band, including its largest single‐day disposal in six years—approximately USD 678 million.
Over a three‐session span, it sold some USD 1.1 billion at the top of the exchange band.
Despite gross reserves exceeding USD 39 billion, net usable reserves are believed to be as low as USD 6 billion after accounting for debt obligations and currency commitments.
The depletion is driven by consistent arbitrage and capital flight.
From April to August alone, individuals and firms extracted USD 9.5 billion from the central bank to exploit parallel market spreads, draining the official reserve base.
The imbalance between export revenues and external obligations exacerbates the erosion, with economist reports indicating USD 12.3 billion in net outflows over the past eleven months.
In response to the drain, Milei’s administration has launched a campaign to coax dollars out of informal hoards—what Argentines call “under-the-mattress” savings.
The “Historical Reparation Plan” allows citizens to deposit undeclared U.S. dollars in local banks without proving their source and lifts reporting requirements for large transactions.
Authorities hope to redeposit billions held outside financial flows into the formal economy.
The economic strain has put pressure on Milei ahead of the midterm vote.
His government also plans to dispatch Economy Minister Luis Caputo to Washington for urgent talks on further U.S. support or a swap line to buffer the reserve shortfall.
Even as rhetoric from the U.S. hints at backing, observers warn that tapping remaining dollars to defend the peso may only delay a deeper crisis unless structural reforms stabilize trade, boost exports, and restore confidence in Argentina’s fiscal trajectory.
Markets are watching closely: a sustained defense of the peso could deplete reserves entirely, forcing a regime shift in Argentina’s exchange framework and triggering renewed volatility in bond spreads, inflation expectations, and macro stability.
