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Amid Electoral Defeat in the Province of Buenos Aires and the Scandal Involving Karina Milei, the Central Bank of Argentina Intervened for the First Time Since April and Sold US$ 53 Million to Keep the Dollar Within the Exchange Band.
Argentina experienced, on Wednesday (17), the first direct intervention in the exchange rate since the adoption of the band regime in April. The Central Bank (BCRA) sold US$ 53 million after the dollar hit the ceiling of the band at 1,474.50 pesos in the wholesale market, triggering the mechanism agreed upon with the IMF, according to local media and international agencies.
The action took place a day after the Milei government’s defeat in the legislative elections of the province of Buenos Aires and amid political and judicial pressures caused by audiotapes and allegations mentioning the president’s sister, Karina Milei.
Intervention “at the Trigger” of the Exchange Band
The BCRA began selling when the quotation touched the upper limit of the fluctuation band, a parameter that, under the agreement with the IMF, expands by 1% per month and authorizes the bank to act when the ceiling is reached. The sale of US$ 53 million was described as the first since the scheme came into effect in April 2025, in an effort to defend the peso and avoid drastic devaluation movements. Infobae, Buenos Aires Herald, and Reuters detailed the day’s dynamics and the program rules with the Fund.
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For investors, the gesture signals a tactical shift in a government that promised minimal intervention. The Financial Times and Bloomberg highlighted the symbolic nature: by activating reserves, Milei is trying to reduce volatility without abandoning the liberal framework, but acknowledges that the exchange policy needs “buffers” amid uncertainty.
Although small, the operation occurs in a context of pressured reserves and fragile growth, making every dollar relevant to anchor expectations and prevent the exchange rate from contaminating prices and imports. According to the IMF note on the EFF of US$ 20 billion, the design of the band precisely provides for “triggered interventions” as a stabilization instrument.
Political Shock and Loss of Confidence
The decision came after the defeat of Libertad Avanza in the province of Buenos Aires on September 7 — a setback considered crucial for market sentiment, given the electoral and fiscal relevance of the district. Reuters and Buenos Aires Herald reported a lead of over 13 points for peronism, reinforcing the perception of difficult governance for the Argentine presidency.
This situation is compounded by the audiotapes and judicial dispute surrounding Karina Milei, the secretary-general of the Presidency. Articles from Reuters, WSJ, El País, and Infobae detail the impact of the case on expectations and the discussion about alleged bribery requests in the policymaking agency for people with disabilities (ANDIS), something that the government denies. The subject has heated the political climate and added uncertainty to investors’ radar.
With cooling growth and monetary tightening already tested, the “defensive appreciation” of the dollar ultimately required the direct action of the BCRA. Analysts consulted by international agencies believe that targeted interventions may contain peaks of stress, but erode reserves if capital flows do not improve.
Risks and Limits of the Strategy
The intervention at the ceiling prevents the regime from breaking and sends a message of commitment to the IMF program, which provides for a mobile and transparent band. At the same time, it exposes the dilemma between defending the peso and preserving reserves, particularly while confidence has not been restored and politics remains noisy.
If the exchange rate remains pressured, the government may be forced into new auctions, increasing the cost of keeping the dollar within the band. Normalization will depend on fiscal improvements, recomposing reserves, and relief from political risk after the electoral cycle. As highlighted by FT and Reuters, this balance is fragile and sensitive to surprises. Any new shock (judicial, electoral, or external) could reignite demand for the dollar.
For companies and consumers, containing exchange rate jumps helps to mitigate pass-throughs and preserve import supply chains for essential goods. But volatility remains high, and the impact on interest rates, credit, and activity continues to be on the market’s radar.
Do you think that the intervention was a necessary retreat to avoid a new exchange rate run or a sign of weakness that might encourage attacks on the peso? Leave your comment and say if you agree with the use of reserves at this moment.
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