BUENOS AIRES, Dec 15 (Reuters) – Argentina’s central bank announced a new monetary framework on Monday, tying the peso’s trading band to inflation in a bid to build reserves and stabilize the economy.
The measures, effective January 1, are part of a broader program designed to move away from temporary exchange controls toward a more permanent system that can support a budding economic recovery.
The bank said the floor and ceiling of the currency band will now be adjusted monthly according to the latest official inflation data. This replaces the previous system of a pre-set 1% monthly shift, a figure that lagged November’s inflation rate of 2.5%.
A primary goal is to accumulate foreign currency reserves, which the bank said are urgently needed to underpin growth. It aims to purchase up to $10 billion, with a potential overall reserve accumulation of $17 billion, depending on balance of payments flows.
The central bank said it intends to expand the monetary base to 4.8% of gross domestic product by the end of 2026 from its current 4.2%, aligning the money supply with an expected recovery in demand for the local currency.
The move aligns with recent guidance from the International Monetary Fund, which earlier this month urged Argentina to strengthen reserve accumulation to regain access to international capital markets.
IMF spokesperson Julie Kozack on Monday said on X she welcomed the recent market access and steps to strengthen the monetary and FX framework, rebuild reserve buffers, and advance growth-enhancing reforms in Argentina.
Financial markets reacted calmly to the changes. The peso firmed up 0.17% to 1,438.5 per U.S. dollar, while the S&P Merval stock index rose 1.13%. Sovereign bond prices also ticked higher, led by dollar-linked issues.
The policy shift comes as the country’s economy shows signs of a turnaround. GDP is forecast to grow 3.5% year-on-year in the third quarter of 2025, a sharp reversal from the 1.9% contraction recorded a year earlier.
(Reporting by Natalia Siniawski, Walter Bianchi and Jorge Otala; Editing by Brendan O’Boyle and Alistair Bell)
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