Argentina’s $2 Billion Repo: A High-Stakes Move to Stabilize Reserves

Argentina’s central bank announced on June 9, 2025, that it will launch a $2 billion repurchase agreement (repo) with international banks to boost its foreign currency reserves.

The operation, scheduled for June 11, comes as the country prepares for an International Monetary Fund (IMF) review after securing a $20 billion loan in April. The central bank reported $38.6 billion in reserves, below the $40 billion target required by the IMF.

The repo lets Argentina temporarily raise dollars by selling securities to banks with an agreement to buy them back later. This approach avoids buying dollars in the local market, which could further weaken the peso.

The move follows a $1 billion repo in December 2024, reflecting ongoing efforts to shore up reserves without destabilizing local markets.

The government has also introduced new options for investors, allowing direct subscription for government securities in U.S. dollars for bonds maturing in over a year, capped at $1 billion per month.

Additionally, Argentina has begun lifting most capital controls, a step made possible by the IMF loan and designed to attract more foreign investment. Argentina’s debt remains high, at around $300 billion, with $60 billion in international bonds.

Inflation, once over 270%, has dropped to about 50%, but nearly 40% of Argentines still live below the poverty line. The country’s strategy aims to restore confidence among investors and meet IMF requirements, but risks remain.

Lifting capital controls could trigger capital outflows, and the high yields on recent bond sales show lingering skepticism. The repo deal and related measures represent Argentina’s attempt to manage its finances, keep the peso stable, and reassure both creditors and citizens that it can meet its obligations.