FX.co ★ Argentina Central Bank Raises Banks' Reserve Requirement

Argentina's central bank increased reserve requirements for banks by 3.5% on Tuesday—marking the third escalation in recent weeks. This adjustment, which will be effective from September 1, targets an array of current reserve requirement rates that presently average around 45%. According to Reuters, analysts caution that these escalating levels might pose a risk to economic growth. This move is perceived as an effort to stabilize market sentiments in light of corruption allegations faced by President Javier Milei's administration ahead of crucial legislative elections. Analysts have also highlighted that the reserve ratio is nearing an exceptionally high 50%, which could impede hopes for an economic rebound. As part of the strategy, banks will be permitted to fulfill these reserve requirements using peso-denominated securities, which the treasury plans to issue through a tender on Wednesday, totaling approximately 7.7 trillion pesos (equivalent to $5.79 billion).