Argentina’s Central Bank cut its one-day peso repo rate by 10 percentage points to 25 percent, according to two people with direct knowledge of the matter, stalling this week’s rebound in the currency.
The new rate was reported through the SIOPEL platform, the country’s main electronic trading system, the people said. The one-day repo rate has become one of the Central Bank’s key monetary policy tools as it navigates persistent inflation pressures and swings in the exchange rate.
Following the decision, the peso weakened to 1,370 per US dollar after briefly touching 1,330 per dollar earlier in the session. It subsequently strengthened back to 1,355 per US dollar.
The peso recovered from record lows on Friday after the government announced grain export taxes would be suspended until October 31. The fiscal relief accelerated dollar sales from exporters and strengthened the peso by about nine percent in just two days. Fear of a sudden devaluation also eased after the US government said it is discussing a US$20-billion swap line with Argentina early on Wednesday.
“The government is taking advantage of the flood of dollars and the increased optimism in the financial market to reduce domestic rates and give the economy a boost in the run-up to the election,” said Juan Sola, an analyst at Banctrust & Co.
A spokesman for Argentina’s Central Bank declined to comment.
The US said it was ready to buy Argentina’s dollar bonds, giving President Javier Milei breathing room until the midterm elections next month.
The move underscores US President Donald Trump’s eagerness to help his ally fend off a run on the peso. The two leaders and their teams met Tuesday on the sidelines of the United Nations General Assembly in New York. Milei thanked his US counterpart for the “firm support” on Wednesday.
“Now that it has found backing for the FX with the grain dollars, and with the expectation of a US loan, it is normal that it seeks to normalise rates,” said Santiago Resico, an economist at brokerage firm one618, referring to the Argentine government. The move will help to “relieve pressure on the ARS curve and reduce the Treasury’s financing needs in pesos.”
by Ignacio Olivera Doll & Nicolle Yapur, Bloomberg
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