Argentina Tightens Currency Controls, Blocking “Rulo” Trades as Dollar Demand Mounts
Buenos Aires – ArgentinaS central bank is expanding restrictions on dollar purchases, effectively halting a common arbitrage strategy known as “rulo” as it attempts to stabilize the official exchange rate amid increasing demand. The move comes less than two weeks after the BCRA imposed limitations on financial entity executives, signaling a hardening of currency controls.
the latest restrictions, reportedly enforced through direct calls from the Ministry of economy to companies, aim to curb the practice of buying dollars at the official rate and selling them in the financial markets for a profit. While entities continued to engage in these transactions despite initial pressure, the central bank’s intervention underscores its determination to prevent further devaluation of the peso. Analysts suggest the government may be attempting to prevent an estimated US $7,000 million from flowing into the Djve del Agro (agricultural dollar).
According to an anonymous operator at an Argentine brokerage, the decision is misguided given the official exchange rate’s stability despite the buying pressure. Romano Group Research Chief believes the monetary authority’s objective is to limit the influx of dollars into the agricultural sector.
The BCRA first tightened restrictions on September 18,applying limitations to shareholders,directors,and managers of Argentine financial entities.That initial move followed a surge in buying pressure in the official dollar market.This latest escalation suggests the central bank is increasingly concerned about maintaining control of the exchange rate as Argentina heads into a critical economic period.